Fairfax Wins Approvals to Raise Stake in IIFL Capital to 51%
Key Facts
FIH Mauritius Investments, a subsidiary of Fairfax India, has received the regulatory and shareholder approvals required to increase its stake in IIFL Capital Services, paving the way to raise its ownership to at least 51%. The deal has not yet been completed, however, as the new share allotment and open offer are still under way, according to a disclosure by IIFL Capital published via PR Newswire. The company said the procedures would be completed within the regulatory timelines, while its arrangements with the existing promoters remain linked to the number of shares shareholders tender in the open offer. On the earnings call, the managing director expected the allotment and offer to be completed during November 2026. This means the approvals have cleared a regulatory and shareholder stage, but do not signal a transfer of ownership or completion of control.
The deal involves issuing new shares through a preferential allotment, alongside an open offer to shareholders, with a possible secondary purchase from the promoters if the combined stakes do not reach the target after the two stages, according to the description by the Competition Commission of India. Fairfax India said in May that its combined ownership with its affiliate HWIC Asia Fund was 30.5%, comprising 27.2% held by the company and 3.3% by the fund. The deal aims to raise that stake to at least 51%, though the final percentage will depend on the outcome of the open offer and arrangements with the promoters. The May agreement set the subscription price for the new shares at 350 rupees per share, with an open offer to buy up to 26% of the capital. Fairfax India estimated the total consideration at about 39.3 billion rupees, subject to the offer’s outcome.
According to the company’s statement, Fairfax will join the promoter group upon completion of the deal and will be able to nominate up to two board members; shareholders have approved this right. Fairfax India had said in May that closing would begin in stages during the fourth quarter of 2026, subject to completion of the open offer, regulatory and third-party approvals, and customary closing conditions. Management’s expectation of completing the procedures during November gives a more specific date than the initial timetable, but remains contingent on completing the execution steps. FIH Mauritius is, according to the Competition Commission of India, a wholly owned subsidiary of Fairfax India Holdings, while Fairfax Financial Holdings is its ultimate parent. IIFL Capital is an Indian financial services company registered with the Securities and Exchange Board of India, providing wealth management, investment banking, brokerage, institutional equities and research services.
The deal comes as IIFL Capital reported annual growth in operating revenue and profit in the second quarter of fiscal 2027. Consolidated revenue was 722 crore rupees, up 22% from 592 crore rupees in the corresponding quarter of the previous fiscal year. Profit after tax reached 127 crore rupees, up 49% year on year from 85 crore, but down 31% from 184 crore rupees in the previous quarter. For the first half of fiscal 2027, revenue rose 12% to 1,353 crore rupees from 1,209 crore rupees, while profit after tax increased 19% to 311 crore from 261 crore. The company also said average daily trading in its brokerage business, including futures and options, rose 16% year on year, while falling 3% from the previous quarter.
Alongside the expected ownership change, the company approved the appointment of Vasudev Jagannath as an additional director and whole-time director for three years, subject to the required approvals, with his reappointment as managing director effective from 1 January 2027. R. Venkataraman will continue as a board member. IIFL Capital also plans to establish a wholly owned subsidiary that will apply for a non-banking financial company licence, with the aim of developing lending and credit activities. Proposed areas include lending secured by financial assets, promoter financing and tailored credit solutions, targeting high-net-worth and ultra-high-net-worth clients. These plans represent expansion avenues announced by the company alongside the deal process, while the transfer of control itself remains contingent on completion of the allotment and open offer.