Canada-based insurance and investment company, Fairfax Financial Holdings, on Friday announced its plan to buy an additional 9% stake of ICICI Lombard General Insurance, making it the third such purchase in India this calendar after announcing investments in diversified financial services firm IIFL Holdings and travel company Kuoni India.
Fairfax, owned by Canadian billionaire Prem Watsa, will increase its ownership to nearly 35% stake in ICICI Lombard from 25.7%. The transaction values the Indian general insurance company at Rs 17,225 crore ($2.6 billion) and the deal is expected to close in the first quarter of 2016, stated a Fairfax statement.
ICICI Lombard is the largest private sector general insurance company in India with gross written premiums of approximately $1 billion for the year ended March 31, 2015. ICICI Bank’s ownership will drop to approximately 64, the bank said in a statement to stock exchanges.
Fairfax will now seek approvals from the Foreign Investment Promotion Board and Irdai. Fairfax India Holdings, the $1-billion fund created by Toronto-based investor Prem Watsa, is seeking to make at least six investments in India and will target infrastructure, consumer services, retail and exporting industries, the company had said in a stock exchange filing in July.
The fund, which started trading in Toronto in January, is seeking to gain “significant influence” or control through its holdings, which can include bets on publicly listed companies, the filing had stated. Fairfax’s stake buy will be the fourth deal in the insurance space after the government raised foreign investment limit in Indian insurance companies to 49% from 26% after the clearance of the Insurance Laws (Amendment) Act.
Standard Life, had in August 2015, announced plans to buy 9% additional stake in its Indian insurance venture HDFC Life to raise its ownership to 35%, valuing HDFC Life at Rs 18,951.4 crore.
The same month, FIPB approved Tokio Marine’s plan to raise stake in its Indian JV partner Edelweiss Tokio Life Insurance to 49% from 26%. British insurer, Aviva also announced its plan to raise stake in its Indian JV with Dabur Invest Corp to 49%.
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