According to The Economic Times, IIFL Finance has categorically denied reports of Fairfax planning to exit the company to fund its proposed IDBI Bank deal. The company issued a clarification on Wednesday stating that "no such information/event that has not already been disclosed to the Stock Exchanges which could account for said movement in the trading." This denial comes after media reports suggested that Fairfax was weighing the sale of its entire stake in IIFL Finance to comply with regulatory guidelines as it moves closer to acquiring IDBI Bank Ltd. The clarification addresses market speculation that had been driving trading activity in the stock.
As reported by The Economic Times, Fairfax held 15.18% in IIFL Finance at the end of June but then sold a 1.49% stake to Capital Group entities for ₹374 crore in July, reducing its holding to about 13.69%. Blackstone is reportedly in talks with Fairfax and other shareholders to acquire the remaining stake, with the private equity giant among global investment firms competing to acquire up to 20% stake in IIFL Finance. The potential deal comes at a time when India's financial services industry has become a target for acquisitions, following Blackstone's investment of more than $700 million for a 9.9% stake in Federal Bank last year.
As reported by Bloomberg, Fairfax's move to exit IIFL Finance is part of a larger strategy to consolidate its Indian lending investments after acquiring IDBI Bank Ltd. The Canadian firm has emerged as the frontrunner to acquire a combined 60.7% IDBI Bank stake from the Centre and Life Insurance Corp. Reports suggest that Watsa could pay ₹81 per share for the lender, taking the total deal to roughly ₹53,000 crore, or $5.5 billion. A successful bid for the Mumbai-based lender could be valued at $6.2 billion at current prices, potentially making it the biggest foreign investment in the country's banking sector. If Fairfax acquires IDBI Bank, it is expected to consolidate some of its existing Indian investments in lending firms in line with regulatory rules, according to sources familiar with the matter.
As reported by CNBC-TV18, IIFL Finance delivered exceptional first-quarter results with consolidated net profit rising 189.3% year-on-year to ₹675.1 crore for the quarter ended June, compared with ₹233.4 crore a year earlier. Total income increased 34% year-on-year to ₹2,202.4 crore, while pre-provision operating profit rose 50% to ₹1,252.4 crore. Profit before tax jumped 161% to ₹928.6 crore, with net interest income rising 54.8% year-on-year to ₹2,003.9 crore. On a pre-non-controlling interest basis, profit after tax stood at ₹713.1 crore, up 160% year-on-year and 14% sequentially.
According to CNBC-TV18, IIFL Finance's consolidated assets under management stood at ₹1,15,523 crore, up 38% year-on-year and 7% quarter-on-quarter. The company's book value stood at ₹333.9, while return on assets was 3.1% and return on equity stood at 19.5%. Its liquidity position was ₹7,148 crore, with the consolidated capital to risk-weighted assets ratio at 24.3%. However, asset quality showed some sequential pressure with gross non-performing assets at 1.6%, up 9 basis points from the previous quarter, while net NPAs rose by a similar margin to 0.8%, though the provision coverage ratio improved to 94%.
As reported by CNBC-TV18, IIFL Finance shares were trading at ₹646.05 on the NSE at 2:50 pm on Monday, down 0.78% from the previous close. The stock erased gains of as much as 2.4% to trade 1.2% lower in Mumbai late afternoon on Monday. The company declined to comment on the matter, stating: "We refuse to comment on market speculation." Fairfax and IIFL Finance may also be in discussions with other private equity investors for a stake sale, according to sources. The potential stake transaction comes after the strong first-quarter performance, with the company showing robust growth across key financial metrics. Buyers are drawn by the growing flow of household savings into formal investments, rising credit demand and the opportunity to scale in a rapidly digitizing market, though regulations often complicate deals.
