Key Takeaways
- • IIFL Finance's board is scheduled to meet on Tuesday to consider proposals for a fresh capital infusion of nearly Rs 5,000 crore, according to people with knowledge of the matter.
- • The board will evaluate separate proposals from private equity firms Blackstone and Advent International.
- • IIFL Finance told ET on October 19 that it planned to sell a 10-20% stake to a minority investor, with promoters able to subscribe to warrants to limit dilution.
- • Prem Watsa-promoted Fairfax Financial Holdings is set to exit its 13.7% stake in IIFL Finance as part of a deal linked to its bid for a majority stake in IDBI Bank under the government's disinvestment programme.
- • It remains unclear whether a single investor would both inject fresh capital and acquire Fairfax's stake, as promoter Nirmal Jain indicated a combined transaction is possible.
Summary
The board of IIFL Finance will meet on Tuesday to consider proposals for a fresh capital infusion of nearly Rs 5,000 crore, according to people with knowledge of the matter. The board will evaluate separate proposals from private equity firms Blackstone and Advent International.
IIFL Finance, promoted by Nirmal Jain, told ET in an interview on October 19 that it planned to raise up to Rs 5,000 crore by selling a 10-20% stake to a minority investor. Promoters could subscribe to warrants to limit dilution. ET had previously reported on September 10 that Advent, along with Singapore's Temasek Holdings, was in contention to acquire a 15% stake in the company.
Separately, Fairfax Financial Holdings, promoted by Prem Watsa, is set to exit IIFL Finance by selling its 13.7% stake to an investor. The sale is linked to Fairfax's acquisition of a majority stake in IDBI Bank under the government's disinvestment programme. It remains unclear whether the same investor could provide fresh capital to IIFL Finance and also acquire Fairfax's existing stake. Jain told ET that an investor could negotiate with both the company and Watsa simultaneously, making it a combined transaction, and that any deal would depend on the private equity investor's preference.
The proposals come against the backdrop of recent Blackstone and Advent activity in India's financial sector. Last October, Blackstone, through affiliate Asia II Topco XIII Pte. Ltd., announced a Rs 6,196.5 crore investment in Federal Bank to acquire up to a 9.99% stake. Advent has expanded its BFSI presence through a stake in Yes Bank, now at 8.5%, a 14% stake in Aditya Birla Housing Finance, and investments in Svatantra Microfin and KreditBee.
Responses from IIFL Finance, Blackstone and Advent to queries on the matter are awaited.
IIFL Finance, promoted by Nirmal Jain, told ET in an interview on October 19 that it planned to raise up to Rs 5,000 crore by selling a 10-20% stake to a minority investor. Promoters could subscribe to warrants to limit dilution. ET had previously reported on September 10 that Advent, along with Singapore's Temasek Holdings, was in contention to acquire a 15% stake in the company.
Separately, Fairfax Financial Holdings, promoted by Prem Watsa, is set to exit IIFL Finance by selling its 13.7% stake to an investor. The sale is linked to Fairfax's acquisition of a majority stake in IDBI Bank under the government's disinvestment programme. It remains unclear whether the same investor could provide fresh capital to IIFL Finance and also acquire Fairfax's existing stake. Jain told ET that an investor could negotiate with both the company and Watsa simultaneously, making it a combined transaction, and that any deal would depend on the private equity investor's preference.
The proposals come against the backdrop of recent Blackstone and Advent activity in India's financial sector. Last October, Blackstone, through affiliate Asia II Topco XIII Pte. Ltd., announced a Rs 6,196.5 crore investment in Federal Bank to acquire up to a 9.99% stake. Advent has expanded its BFSI presence through a stake in Yes Bank, now at 8.5%, a 14% stake in Aditya Birla Housing Finance, and investments in Svatantra Microfin and KreditBee.
Responses from IIFL Finance, Blackstone and Advent to queries on the matter are awaited.
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