Fairfax India Holdings Corporation, an investment platform created by Indian-origin Canadian investor Prem Watsa, has agreed to acquire a 45 per cent stake in specialty chemicals maker ADI Finechem Ltd from its promoters for around Rs 130 crore ($20 million).
Fairfax India has also made an open offer to buy another 26 per cent of ADI from the public shareholders for up to Rs 76 crore, according to a statement.
The acquisition is the latest in a series of deals that Fairfax has struck in India this year. It is also the second deal where Fairfax is taking a controlling stake in an Indian company. In July, it had inked an agreement to buy a 74 per cent stake in National Collateral Management Services Ltd for Rs 800 crore ($125 million).
Fairfax group has also sought to hike its stake in Carlyle-backed financial services company IIFL Holdings Ltd (formerly India Infoline). Fairfax group owns just under 9 per cent in IIFL and Fairfax India has made a voluntary open offer to buy 26 per cent more for Rs 1,621 crore ($255.4 million).
The group has also proposed to increase its stake in general insurer ICICI Lombard. Besides, Fairfax-controlled Thomas Cook (India) Ltd in August signed an agreement to buy Kuoni Group's travel & tour business in India and Hong Kong for Rs 535 crore ($84 million then). Thomas Cook and another Fairfax-controlled firm, Sterling Holidays, have made some other small acquisitions in India, Sri Lanka and Qatar over the past few months.
For the ADI open offer, Fairfax India has offered to buy the shares at Rs 212 apiece. Shares of ADI jumped on Thursday and were trading 9 per cent higher at Rs 231.80 on the Bombay Stock Exchange at 12.45 pm.
The open offer is mandatory under the takeover norms of the capital markets regulator Securities and Exchange Board of India.
“This investment fits within our strategy of investing in well-managed companies with a history of profitability and high integrity," said Watsa, chairman of Fairfax India.
ADI will continue to operate independently under chairman Utkarsh Shah and managing director Nahoosh Jariwala. Based in Ahmedabad, ADI makes oleo chemicals used in the paints, inks and adhesives industries. It also makes intermediate nutraceutical and health products.
The deal is likely to close in the first quarter of 2016, subject to regulatory approvals, other conditions and completion of the open offer.
Fairfax India is an investment holding company created last year to invest in India. It raised $1.06 billion partly through an initial public offering on the Toronto Stock Exchange in January this year. Watsa's Fairfax Financial Holdings is the anchor investor in Fairfax India.