Fairfax India Holdings Corporation, part of India-born Canadian billionaire Prem Watsa's Fairfax Group, has signed a pact to acquire a 51% stake in Privi Organics Ltd for about Rs 370 crore ($55 million) in its sixth deal in the country within a year.
Fairfax India, a Toronto-listed fund sponsored by Watsa's investment firm Fairfax Financial Holdings Ltd, has now deployed an estimated $935 million of its $1.06 billion corpus raised last February through an initial public offering. This makes it one of the most prolific PE investors in India.
Fairfax said in a statement also that Privi Organics will separately merge part of its business with Adi Finechem Ltd, in which the investment firm had acquired a 45% stake earlier this year for $20 million.
Mumbai-based Privi Organics, a supplier of aroma chemicals to fragrance makers and consumer goods companies, is the third Indian chemicals company in Fairfax's portfolio.
Based in Ahmedabad, Adi Finechem makes oleo chemicals used in the paints, inks and adhesives industries. It also makes intermediate nutraceutical and health products.
Fairfax India said it will own about 49% of the merged business, which will be renamed Fairchem Speciality Ltd. Adi Finechem and Privi Organics will continue to operate as distinct and independent business units of Fairchem.
The deal involving a stake purchase in Privi is likely to close in the third quarter of 2016. The merger transaction is likely to close in first quarter of 2017. The transactions are subject to customary closing conditions and regulatory approval.
The combined company will convert renewable waste feed stock into value-added speciality chemicals. The deal will give Adi Finechem access to high-quality research and development facilities. Privi Organics will benefit from Adi Finechem’s focus on cost optimization and capital efficiency, Fairfax said.
Adi Finechem chairman Utkarsh Shah Fairchem will be one of India’s largest speciality chemicals companies and will be well-positioned for growth and profitability, Watsa is the founder of Fairfax Financial and regarded as the Warren Buffett of Canada. He created Fairfax India with $300 million commitment from Fairfax Financial. With other cornerstone investors followed by an IPO and underwriters' portion, Fairfax India raised $1.06 billion that it is now investing in the South Asian nation.
Fairfax's maiden investment in India was into financial services provider IIFL (formerly India Infoline). It later invested in National Collateral Management Services and ADI Finechem. It also agreed to invest Bangalore International Airport and Sanmar Chemicals Group.
Separately, it has also put in more money into the country as it raised its holding in general insurance firm ICICI Lombard.
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