IIFL Finance shares fall 3%; company denies Fairfax exit report

Shares of IIFL Finance Ltd fell nearly 3 per cent in Wednesday's trade after the company denied a media report that suggested Fairfax Financial Holdings was planning to exit its investment in the non-banking financial company to help fund its proposed acquisition of IDBI Bank.

BSE and NSE had earlier sought a response from IIFL Finance regarding a report on the development. IIFL Finance said there was no information or event that had not been disclosed to the stock exchanges that could account for the recent movement in its share price.

IIFL Finance shares were trading at Rs 608.95 on BSE, down 2.79 per cent over their previous close of Rs 626.45. The stock opened at Rs 627.60 and hit a high of Rs 628, before falling to a low of Rs 608.70 during the session.

In its response to the exchange, IIFL Finance said, "There have been no such negotiation/event from the company in connection with the above news article."

The NBFC said there was no undisclosed information that could explain the movement in trading and that there were no related regulatory or legal proceedings. The movement in the share price appears to be driven by market sentiment or other factors beyond the control of the company, IIFL Finance said.

The Economic Times report said Fairfax Financial Holdings, backed by Prem Watsa, was planning to sell its remaining around 13.7 per cent stake in IIFL Finance and use the proceeds to part-fund its proposed acquisition of IDBI Bank. Fairfax was reportedly in discussions with at least four private-equity investors for the stake.

At IIFL Finance's then market capitalisation of around Rs 27,700 crore, Fairfax’s stake was estimated to be worth around Rs 3,800 crore, before any premium or discount. Fairfax held 15.18 per cent at the end of June but sold a 1.49 per cent stake to Capital Group entities in July for Rs 374 crore, reducing its holding to about 13.69 per cent.

The report also said Fairfax plans to merge CSB Bank with IDBI Bank if its proposed acquisition of the state-owned lender goes through. Fairfax currently owns 40 per cent of CSB Bank. It is also looking to consolidate IIFL Capital Services with the wider IDBI Bank platform, according to the report.

Separately, Blackstone has been reported to be among the investors in discussions to acquire Fairfax's stake in IIFL Finance.