Canada’s Fairfax Financial to Raise $536.4M to Fund Larger Stakes in 2 Insurers

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Fairfax Financial Holdings said on Monday it plans to raise C$735 million ($536.42 million) through an equity issuance, to fund its acquisition of interests in Eurolife ERB Insurance Group Holdings and ICICI Lombard General Insurance Co.

The offering of one million shares, which is being run as a bought deal – with the underwriters BMO Capital Markets, CIBC Capital Markets and RBC Capital Markets guaranteeing Fairfax a price of C$735.00 per subordinate voting share, is expected to close on March 2.

The offering is the second largest such equity financing in Canada this year following Franco-Nevada Corp’s offering last month, which raised $920 million (C$1.26 billion).

Fairfax announced in October it planned to acquire a further 9 percent stake in ICICI Lombard from its joint venture partner India’s ICICI Bank. The insurer is the largest private sector general insurance company in India with gross written premiums of about $1 billion for the year ended March 31, 2015.

The deal is set to take Fairfax’s stake in the insurer up to 35 percent, with ICICI Bank owning the remainder.

In December, Fairfax agreed to buy an 80 percent stake in Eurolife ERB Insurance, from Greek lender Eurobank Ergasias S.A. for 316 million euros ($348.5 million).

Fairfax, headed by well known contrarian investor Prem Watsa, made billions by correctly calling the 2008 financial crisis. Watsa has since bet on a rebound in the Greek economy via a number of investments there, including one in Eurolife’s parent Eurobank.

The closings of the Eurolife and ICICI Lombard transactions remain subject to regulatory approval. If the Eurolife, or ICICI Lombard acquisitions are not successfully completed, or if there is any remaining balance of proceeds from the offering, Fairfax said it plans to use the funds to augment its cash position, pursue other potential acquisition opportunities, or retire debt.

($1 = 1.3702 Canadian dollars); (1 Canadian dollar = $0.7296); ($1 = 0.9069 euros)

(Reporting by Euan Rocha; editing by Bernard Orr)