Shares of IIFL Finance Ltd. experienced a nearly 3% decline in Wednesday's trading session following the company's strong denial of a media report. The report had speculated that Fairfax Financial Holdings was preparing to divest its investment in the non-banking financial company (NBFC) to help finance its proposed acquisition of IDBI Bank.
The denial by IIFL Finance came in response to inquiries from stock exchanges, including BSE and NSE, which had sought clarification regarding recent movements in the company's share price. IIFL Finance stated that there was no undisclosed information or event that could account for the trading activity.
Fairfax Exit Report Details
According to the original report by The Economic Times, Prem Watsa-backed Fairfax Financial Holdings was reportedly planning to sell its remaining approximately 13.7% stake in IIFL Finance. The proceeds from this potential sale were intended to partially fund its bid to acquire IDBI Bank.
The report further suggested that Fairfax was in discussions with at least four private-equity investors regarding the stake sale. At IIFL Finance's market capitalization of approximately Rs 27,700 crore at the time, Fairfax's stake was estimated to be worth around Rs 3,800 crore.
Fairfax's holding in IIFL Finance stood at 15.18% at the end of June. However, it sold a 1.49% stake to Capital Group entities in July for Rs 374 crore, reducing its ownership to about 13.69%.
Broader Acquisition and Consolidation Plans
Beyond the IIFL Finance stake sale, the report outlined Fairfax's broader strategic moves. It indicated that Fairfax plans to merge CSB Bank, where it currently holds a 40% stake, with IDBI Bank should its proposed acquisition of the state-owned lender be successful. Additionally, Fairfax was reportedly looking to integrate IIFL Capital Services with the wider IDBI Bank platform.
Separately, Blackstone has been mentioned among the investors reportedly in discussions to acquire Fairfax's stake in IIFL Finance, according to market sources.
Company's Stance on Share Movement
In its official response to the stock exchanges, IIFL Finance categorically stated, "There have been no such negotiation/event from the company in connection with the above news article." The NBFC reiterated that no undisclosed information existed that could explain the share price fluctuations, and there were no related regulatory or legal proceedings. The company concluded that the share price movement appeared to be driven by market sentiment or other factors beyond its control.