Blackstone is discussing a possible investment in IIFL Finance, joining other international investors examining the Indian non-bank lender, while Fairfax Financial Holdings is considering selling its entire stake in the company, reported Bloomberg citing sources.
According to the sources, Fairfax, founded by Indian-born Canadian billionaire Prem Watsa, is looking at an exit from IIFL Finance as it works to align with regulatory requirements ahead of a possible acquisition of IDBI Bank.
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They said the deliberations involving IIFL Finance remain at an early stage and may still change.
As of 30 June, Fairfax had a 15.2% interest in IIFL Finance.
Blackstone is holding talks with Fairfax as well as other shareholders regarding the potential stake purchase.
The US-based alternative asset manager invested more than Rs61.9bn ($705m) last year to acquire a 9.9% holding in Federal Bank.
The possible sale by Fairfax points to broader preparations for its proposed purchase of a 60.7% interest in IDBI Bank through a revised offer that Indian authorities are said to be close to approving.
If Fairfax completes the IDBI Bank deal, it is expected to reorganise part of its existing investments in Indian lending businesses to remain in line with regulatory norms, the people said.
Fairfax also holds a 40% stake in private-sector lender CSB Bank.
Such a step would resemble an earlier case in which Fairfax Financial Holdings cut its holding in ICICI Lombard General Insurance Company to satisfy regulatory rules before acquiring CSB.
In May, Fairfax’s India arm agreed to increase its stake and become the controlling shareholder in IIFL Capital Services.
The sources said Fairfax intends to place IIFL Capital under its wholly owned subsidiary after completing the IDBI Bank acquisition.
