Fairfax India to invest $300 million in Sanman Chemicals

CHENNAI: Fairfax India Holdings Corp said it would invest $300 million (Rs 1,998. 29 crore) in privately-held Indian petrochemical major Sanmar Chemicals Group through a combination of equity and debt.
Fairfax India, a unit of Prem Watsa's Fairfax Holdings, will acquire a 30% equity ownership in Sanmar and generate a fixed return on its investment.
Fairfax India, which is currently limited to investing no more than 25% (about $250 million) of its total assets in any single investment, will fund an initial tranche of $250 million upon the closing of the transaction, and the second tranche of $50 million will be funded within 90 days thereafter by Fairfax Financial Holdings Limited ("Fairfax") or another investor.
The first tranche is expected to be completed in second quarter of 2016 upon the satisfaction of certain conditions precedent, including the establishment of a term loan facility for $280 million between TCI Sanmar Chemicals Egypt, the Egyptian unit of Sanmar, and its lenders.
Sanmar, which is one of the largest suspension PVC manufacturers in India, is in the process of expanding its PVC capacity in Egypt from two lakh tonne per annum to four lakh tonne per annum.
Once the expansion is completed, Sanmar will have a total PVC capacity of over 700,000 tonne per annum, making it among the largest PVC companies in the world, said Fairfax India.
"Sanmar is well-placed to cater to the growing demand for PVC in the emerging markets of India, the Middle East and Europe," said Prem Watsa, chairman of Fairfax India.