Canadian Billionaire Prem Watsa commits $200mn to IIFL Finance

Mumbai: Mumbai: Canadian billionaire Prem Watsa’s Fairfax group, an early investor in IIFL Finance, has committed to provide up to $200 million liquidity support to the finance company. The announcement came even as shares of the company hit the 20% lower circuit for the second consecutive day after the Reserve Bank of India barred the lender from extending gold loans, which form nearly a third of its credit portfolio.

In a statement to the exchange, IIFL said that the RBI's embargo has raised liquidity concerns amongst the company’s investors and lenders. In response to these concerns, Fairfax India has agreed to invest up to $200 million of liquidity support on terms to be mutually agreed and subject to applicable laws, including regulatory approvals, if any. The two partners did not disclose whether the investment could be in the form of equity or debt.

"We have been long-term investors in the IIFL group of companies and have full trust and confidence in the company's strong management team led by Nirmal Jain and R Venkataraman. We are confident that Nirmal and Venkat will take corrective actions to meet and exceed RBI's compliance standards,” said Prem Watsa, Chairman of Fairfax India.

Nirmal Jain, Managing Director and Founder of IIFL Finance, said, “At this crucial juncture, Fairfax India’s and Prem’s generous offer to provide liquidity support is very timely and motivating. We are committed to complying fully with RBI’s directives and growing the business under the regulator’s guidance on the strong foundation of compliance, risk management, and fair practices.”

IIFL Finance is a key player in small ticket gold, home, and business loans, with loan assets of about Rs. 78,000 crores, net-worth of over Rs. 10,000 crores, serviced by 4,681 branches and about 40,000 employees. Fairfax India is an investment holding company focused on long-term capital appreciation, while preserving capital, by investing in public and private equity securities and debt instruments in India and Indian businesses with links to India.