Fairfax India Holdings Corporation, an investment platform created by Indian-origin Canadian investor Prem Watsa, will sell its 48.8% shareholding in Privi Speciality Chemicals Limited to certain entities affiliated with Mahesh P Babani and D B Rao for Rs 1,220 crore ($163 million).
The transaction, subject to customary closing conditions and approvals and expected to close in the second quarter of 2021, will raise Babani’s stake to 63% and overall promoter shareholding will consolidate at 74%.
This will ensure single point control and leadership in implementing strong growth strategy envisaged by the company, a statement said.
In November 2015, Fairfax acquired 45% stake in the company for Rs 130 crore ($20 million).
Going by this, the deal roughly translates into over 9x returns for Fairfax.
The deal at the time had triggered an open offer and Fairfax offered to buy an additional 26% stake in the company from minority shareholders for up to Rs 76 crore. However, it was later reported in February 2016 that the open offer failed and the shareholders did not participate.
This led to Fairfax holding 44.93% of the firm as against the proposed 70.66%.
After the deal in review, Fairfax’s association with Privi group will continue through its investment of Rs 55 crore in non-convertible debentures in one of the affiliates of Babani.
Privi Speciality Chemicals’ shares closed at Rs 883.65 apiece on Friday on BSE, down 4.21% from the previous day’s closing price.
The Gujarat-based company, founded in 1985, offers specialised aroma chemical products for the nutraceutical industry.
