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IDFC Bank picks up stake in Fairfax-backed IIFL Holdings for $75 mn

06 February, 2017

IDFC Bank Ltd, the youngest private-sector bank in the country, has picked up a minority stake in IIFL Holdings Ltd for about Rs 503 crore ($75 million).

The bank bought about 1.5 crore shares at Rs 317 apiece, or an about 5% stake, in the Mumbai-based financial services company from JP Morgan, stock-exchange data show.

JP Morgan held a 5.13% stake in IIFL through an investment vehicle, Copthall Mauritius Investment Ltd. The promoters, led by founder and chairman Nirmal Jain, own about 29% of IIFL. 

IDFC Bank has been aggressively picking up stakes in financial services companies after securing a banking licence. It has so far bought into Grama Vidiyal Microfinance, Suryoday Small Finance Bank Ltd and ASA International India Microfinance Pvt Ltd.

IIFL—formerly known as India Infoline—has attracted several marquee investors in recent years. In July last year, CDC Group Plc, the UK government-owned development finance institution, invested Rs 1,000 crore ($150 million) in the non-banking financial arm of IIFL Holdings.

Set up in 2004, IIFL Holdings is a holding company for broking, non-banking finance, housing finance, wealth management, institutional equities, investment banking and insurance distribution, among other financial services.

Fairfax investment

Canadian investment giant Fairfax, led by Indian-origin billionaire Prem Watsa, first invested in IIFL in 2011 when it acquired a 9% stake through Hamblin Watsa Investment Counsel Fund. Hwic Asia Fund owned about 8.8% of IIFL at the end of December 2016.

In July 2015, Fairfax India Holdings Corp increased its stake in IIFL Holdings Ltd to 30.72% through an open offer. It also had an economic interest of another 5.24% stake through derivative instruments.

The open offer saw Carlyle fully exiting its four-year-old investment in the firm by selling its entire 9.15% stake, pocketing around Rs 560 crore.

IIFL Holdings

The company reported consolidated profit after tax of Rs 191 crore on total income of Rs 1,518 crore for the first half of the current fiscal year. As on 30 September 2016, it had total assets under management of Rs 20,474 crore. 

IIFL doesn’t accept public deposits and offers home loans, gold loans, vehicle loans and business loans to small and medium-sized companies through almost 1,000 branches. For the year through March 2016, its loan book was Rs 17,770 crore and net profit of Rs 340 crore.

In November last year, IIFL acquired Samasta Microfinance Ltd, a Bangalore-based NBFC to enter the microfinance segment and expand its offerings.

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IDFC Bank picks up stake in Fairfax-backed IIFL Holdings for $75 mn

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