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Fairfax to raise $536M to part-fund ICICI Lombard deal

23 February, 2016

Fairfax Financial Holdings Ltd, the Canadian investment firm founded by India-born Prem Watsa, is looking to raise C$735 million (about $536.42 million) through an equity issue to fund acquisition of interests in Eurolife ERB Insurance Group Holdings and ICICI Lombard General Insurance Co.

The investment firm has signed an agreement with a syndicate of underwriters led by BMO Capital Markets, CIBC Capital Markets and RBC Capital Markets under which the underwriters have agreed to buy one million subordinate voting shares, on a bought-deal basis, at a price of C$735 per Subordinate Voting Share, according to a press release.

The offering of shares, which is the second largest such equity financing in Canada this year following Franco-Nevada Corp’s offering last month, is expected to close on March 2 subject to obtaining customary TSX approval.

The company has granted the underwriters an option, exercisable at the offering price for a period of 30 days following closing of the offering, to purchase up to an additional 15 per cent of the subordinate voting shares offered in the offering to cover over-allotments, if any.

In October, Fairfax agreed to buy additional 9 per cent stake in ICICI Lombard from its joint venture partner ICICI Bank, in a move that would take its total holding in the insurer to 35 per cent. ICICI Lombard is the largest private sector general insurer in India with gross written premiums of about $1 billion for the year ended March 31, 2015.

In an unrelated deal, in December, Fairfax also agreed to buy an 80 per cent stake in Eurolife ERB Insurance from Greek lender Eurobank Ergasias S.A. for about $348.5 million.

Both the deals are subject to regulatory approvals.

If the Eurolife or ICICI Lombard acquisitions are not successfully completed, or if there is any remaining balance of proceeds from the offering, Fairfax said it plans to use the funds to augment its cash position, pursue other potential acquisition opportunities, or retire debt, it said.

Fairfax owns a stake in insurers like Crum & Forster, Northbridge Financial and Zenith in North America; Fairfax Brazil in Latin America, Brit Insurance in Europe and Gulf Insurance in the Middle East.

It also has a stake in Alltrust, Falcon Insurance (Hong Kong and Thailand), First Capital and Pacific Insurance besides ICICI Lombard in Asia. Besides, it has exposure to reinsurers such as Advent, Group Re, Polish Re, Singapore Pe, Thai Re and Odyssey Re.


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Fairfax to raise $536M to part-fund ICICI Lombard deal

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