Fairfax India seeks controlling stake in ADI Finechem

Fairfax India Holdings - which went public in Toronto earlier this year, raising $1 billion through a combination of an IPO and a private placement - will acquire 6.16 million shares in ADI at INR212 apiece, according to a regulatory filing. It has also made an open offer for a further 3.58 million shares, or a 26% stake, at the same price.

Utkarsh Shah, the current chairman of ADI, will reduce his holding to 2.83% from 17.29%, as part of the first tranche of Fairfax's investment. However, he will retain his position within the company, as will Managing Director Nahoosh Jariwala.

Based in Gujarat and founded in 1985, ADI manufactures oleo chemicals - primarily from agricultural waste products - used in paints, inks and adhesives, as well as intermediate nutraceutical and health products.

Output of oleo chemicals, including dimer acide and linoleic acid, reached 21.68 billion tons in the 2015 financial year, compared to 17.91 billion tons the previous year. These chemicals accounted for 74% of revenue. Nutraceuticals production volume was 1.68 billion tons, up from 1.5 billion tons.

Overall revenue came to INR1.51 billion in 2015, down slightly from INR1.52 billion for the previous 12 months. Net profit fell to INR137 million from INR187 million over the same period.

"This investment fits within our strategy of investing in well-managed companies with a history of profitability and high integrity," said Prem Watsa, chairman of Fairfax India, in a statement.

Also last week, Fairfax Financial Holdings - parent of the India unit - agreed to buy an additional 9% of ICICI Lombard General Insurance from ICICI Bank for approximately $234 million. On completion of the transaction, it will own a 35% stake in the business, with ICICI Bank holding 64%.

Earlier this year, the Fairfax India subsidiary offered to buy a 26% stake in IIFL Holdings, a financial services company backed by The Carlyle Group, for INR16 billion.

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• Topics
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