Fairbridge Capital raises stake in Thomas Cook to 74.77%

Fairbridge Capital, an affiliate of Canada's investment firm Fairfax Financial Holdings Limited, has increased its stake in Thomas Cook (India) Ltd to 74.77 per cent by converting part of the compulsorily convertible preference shares (CCPS) it had subscribed in March 2014.

In a filing to the stock exchanges, Thomas Cook said that it has issued 18.2 million equity shares of Rs 1 to its promoter Fairbridge Capital upon conversion of 1.8 million CCPS of Rs 10 each held by them in the company.

Fairbridge had picked 62,50,000 compulsorily convertible preference shares (CCPS) of Rs 10 each at a price of Rs 800 per share convertible into 6,25,00,000 equity shares of the company having face value of Re 1 per share last year by shelling out about Rs 500 crore (then $82 million).

At that time, Fairbridge Capital owned a controlling 74.96 per cent equity stake in Thomas Cook.

Its holding got diluted with further share issues through ESOPs etc to 72.96 per cent as of December 31, 2014. It continues to hold more CCPS in Thomas Cook India which upon conversion would provide additional stake to Fairbridge in future.

But for now it has chosen to convert only a part of the CCPS to comply with public listing norms, which require a minimum of 25 per cent free float of a listed firm.

Set up by India-born Prem Watsa, Fairfax (through Fairbridge Capital) had originally acquired 77 per cent in Thomas Cook (India) from its UK-based parent for $171 million in 2012 and hiked its stake to over 87 per cent stake through the open offer.

It later diluted its holding to 75 per cent through an institutional placement programme (IPP). This was the first deal for Fairfax in India after setting up an India office in 2011.

Although Thomas Cook's core business remains its travel & tour agency, Fairfax has gone ahead and built it as a multi-business enterprise after using it as a platform to acquire HR services firm Ikya (now Quess).Bangalore-based business services provider Quess Group inked a deal to acquire NYSE-listed Aramark's Mumbai-based facility management arm last month.

Quess also acquired Chennai-based Hofincons Infotech & Industrial Services from Australian firm Transfield Services and signed a definitive agreement with ultimate parent Fairfax to acquire 49 per cent stake in its US-based wholly-owned subsidiary MFXchange Holdings Inc last year.

In 2013, it completed acquisitions of two companies—Avon Facility Management Services Pvt Ltd and Magna Infotech Pvt Ltd—by acquiring the remaining stake.

Quess now provides services under four verticals - global technology, industrial asset management, integrated facilities management and people & services. The company currently has 90,000 employees and operates in 32 cities of India, the North America, Middle East and South East Asia. It has annual revenues of over Rs 2,400 crore.

Meanwhile, Fairfax recently created a new firm in Canada with a corpus of over $1 billion which is to make control-oriented deals in India.

On Wednesday, shares of Thomas Cook closed the day at Rs 211.90, up 3.04 per cent from its previous on the BSE in weak Mumbai market.

(Edited by Joby Puthuparampil Johnson)

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