Fairfax’s India bank gears up for stock market listing in 2019

MUMBAI • Canadian investor Prem Watsa’s (picture) Indian bank has started preparations for a stock market listing this year, its CEO said.

Catholic Syrian Bank Ltd, in which Watsa’s Fairfax India Holdings Corp received approval to take a controlling stake, is gearing up for a listing that may involve a four billion rupee (RM240 million) initial public offering (IPO), according to CEO C VR Rajendran.

Last year, Toronto-based Fairfax agreed to invest US$168 million (RM688.8 million) for a 51% stake in the bank, the first time the Reserve Bank of India (RBI) allowed a foreign firm to take a majority interest in a local lender. At the same time, the RBI told privately held Catholic Syrian Bank that it should list its shares before Sept 30 this year, according to Fairfax India’s latest annual report.

Catholic Syrian Bank has hired Axis Capital Ltd to manage the listing, and is debating exactly which route to market it will take, Rajendran said in a recent interview. He said he’s seeking approval from the Securities and Exchange Board of India (Sebi) for a direct listing — where all existing shares become tradable without the need for an IPO. But if the bank doesn’t get the nod from Sebi, he will instead pursue an IPO that may involve the sale of both new and existing shares, Rajendran added.

Fairfax Financial Holdings Ltd owns assets around the world, with Watsa particularly enthused by opportunities in India. Since August 2015, he has invested about US$1.6 billion in Indian assets, from chemicals manufacturers to financial services providers, according to the Fairfax annual report.

The advantage of a direct listing is that it won’t dilute Fairfax’s holding in the bank, Rajendran said. But direct listings for companies not already quoted on one of India’s various exchanges are unusual, and so approval from Sebi isn’t a foregone conclusion, according to Sandeep Parekh, a former ED at the regulator.

The shareholding agreement reached last year gave Fairfax 18 months from October to build its stake to 51% via purchases of privately held shares and warrants.

Catholic Syrian is undergoing a change of strategy, reversing a move into large-scale corporate lending after many of the loans soured, Rajendran said. With backing from Fairfax, the bank wants to return to its roots in handing out loans to the gold and retail sectors, and to small-and mid-sized enterprises. — Bloomberg