IIFL Finance To Get Up To $200 Mln Investment From Shareholder Fairfax India

Fairfax India agrees to invest up to $200 million in IIFL Finance to provide liquidity support amid RBI’s restrictions on its gold loan business
IIFL Finance To Get Up To $200 Mln Investment From Shareholder Fairfax India

IIFL Finance Ltd. said its shareholder Fairfax India Holdings Corporation agreed to invest up to $200 million in the company to provide liquidity support amid the Reserve Bank of India’s (RBI) restrictions on the company’s gold loan business.

The RBI's embargo has raised liquidity concerns among the company’s investors and lenders, IIFL said in a stock exchange announcement. Therefore, Fairfax India agreed to invest up to $200 million in the non-bank lender on mutually agreed terms, it added.

"We have been long-term investors in the IIFL group of companies and have full trust and confidence in the company's strong management team led by Nirmal Jain and R. Venkataraman,” Fairfax India Chairman Prem Watsa said.

The investment will be subject to applicable laws, including regulatory approvals.

Watsa said Fairfax India is confident that Jain and Venkataraman will take corrective actions to meet and exceed the RBI's compliance standards.

IIFL Founder and Managing Director Jain said the company is committed to complying fully with the RBI’s directives and growing the business under the regulator’s guidance on the strong foundation of compliance, risk management, and fair practices.

Shares of IIFL hit 20% lower limit for the second straight session today after the RBI on 4 March imposed restrictions on the company’s gold loan business. The stock was quoting at a new 52-week low of 382.20 rupees apiece on the NSE.

Meanwhile, global brokerage Jefferies downgraded IIFL to Hold from Buy and slashed its base case target price to 435 rupees from 765 rupees per share following the RBI’s action against the company.

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