Prem Watsa’s Fairfax to buy 74% in logistics firm NCMSL for $126 mn

20 Jul 2015


Fairfax India Holdings, the Indian arm of Canadian investor Prem Watsa's private equity fund Fairfax Financial Holdings, is buying a 74-per cent stake in commodities storage and logistics firm National Collateral Management Services (NCMSL) for Rs800 crore (about $126 million).

Fairfax India Holdings Corporation made the acquisition through its wholly-owned subsidiary FIH Mauritius Investments Ltd, the company said, adding that the transaction is subject to customary closing conditions and is expected to be completed later in 2015.

NCMSL is a leading private-sector agricultural commodities storage company in India that has been in operation for over 10 years and is now preparing to expand to take advantage of the significant market potential in India's under-developed agricultural storage industry.

The company operates in the mid-stream agriculture value chain by offering end-to-end solutions in grain procurement, testing, storage and collateral management.

The new incentives announced by the government, ''private sector players such as NCMSL are enhancing the range of solutions provided to Indian farmers, traders, food processors, banks and governments and to the businesses connected to the agriculture supply chain, thereby generating significant efficiencies to help India achieve its stated national objective of greater food security,'' a Fairfax release stated.

"We are looking forward to investing in National Collateral which, under the leadership of its CEO, Sanjay Kaul, will continue to build on its position as the largest private-sector agriculture warehouse and grain collateral storage company in India," said Prem Watsa, chairman of Fairfax India. "National Collateral has an impressive management team, and our long-term approach to investing will allow it to take advantage of the substantial market potential in India by offering competitive, market-driven solutions for India's agriculture warehouse and grain storage industry. In researching this investment, we had the advantage of expert diligence that was conducted by AFGRI Holdings, Africa's largest grain storage company, which has been in business for over 90 years (Fairfax Financial, Fairfax India's controlling shareholder, owns 40 per cent of AFGRI).

Fairfax has been advised by IDFC Securities Limited. ''I am particularly pleased that, in addition to being a tremendous investment opportunity, National Collateral will be at the forefront of a market-driven solution that will benefit the people and small farmers in India and contribute to food security for the country."

Watsa said National Collateral will continue to operate independently under the leadership of Sanjay Kaul and his highly experienced executive team. ''Fairfax India will also collaborate closely with the continuing National Collateral shareholders, which include National Commodity and Derivatives Exchange Limited and a number of Indian banks.'

Hyderabad-born Watsa, whose main firm is Fairfax Financial Holdings, set up Fairfax India late last year to boost the firm's investment in India. Fairfax India went public in January this year and raised more than $1 billion via its initial public offering.

Last week Fairfax India Holdings Corporation struck a deal to hike its stake in Indian financial services firm IIFL Holdings to up to 26 per cent, by buying additional shares for $225 million (Rs 1,621 crore) (See: Prem Watsa's Fairfax India to buy upto 26% stake in IIFL Holdings ).

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