Blackstone among firms in fray to buy Fairfax stake in IIFL Finance

Blackstone, along with other global investment firms, is considering purchasing a stake in Indian shadow lender IIFL Finance Ltd. amidst Fairfax Financial Holdings Ltd.'s potential exit from the company, according to sources familiar with the situation. Fairfax, led by Indian-born Canadian billionaire Prem Watsa, is evaluating selling its complete stake in IIFL Finance to adhere to regulatory guidelines as it prepares to acquire IDBI Bank Ltd., sources indicated, stressing that these plans are still in early stages and may change.

The possibility of Blackstone's involvement arises as India's financial services sector emerges as a prime target for acquisitions, including Blackstone's recent $700 million investment in Federal Bank. No immediate statements were provided by Fairfax, IIFL Finance, or Blackstone regarding the queries received by Bloomberg News, with Blackstone declining to offer any comments.

Currently, Fairfax holds a 15.2% stake in IIFL Finance, valued at $2.9 billion, as of June 30, while the stock price dropped by 1.2% to 1.2% in the Mumbai market on Monday. Fairfax's strategy aligns with its intent to acquire a 60.7% stake in IDBI Bank through a sweetened offer, which Indian authorities are reportedly close to accepting.

The transaction could be valued at $6.2 billion at current prices, potentially making it the largest foreign investment in India's banking sector. If successful, Fairfax plans to integrate some of its existing Indian investments in lending firms in compliance with regulatory rules.