TORONTO, ONTARIO, CANADA — Fairfax India Holdings Corp. announced on July 20 that, through its wholly-owned subsidiary Fairfax India Holdings Mauritius Investments Ltd., it has agreed to acquire approximately 74% of National Collateral Management Services Limited for an aggregate investment of approximately INR 8 billion (approximately $126 million). The transaction is subject to customary closing conditions and is expected to be completed later in 2015.
National Collateral is a leading private-sector agricultural commodities storage company in India that has operated 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. As a result of recent fiscal and non-fiscal policy announcements in India, private sector players such as National Collateral (www.ncml.com) 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.
"We are looking forward to investing in National Collateral which, under the leadership of its chief executive officer (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% of AFGRI). We also benefitted from the financial advisory services of 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."
Following the investment by Fairfax India, National Collateral will continue to operate independently under the leadership of Kaul and his 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.