$300mn investment by Fairfax in Sanmar
The Dollar Business Bureau
Fairfax India has announced that it would invest $300 million in Sanmar chemicals group, an Indian private petrochemical company. Fairfax has agreed that it would obtain a minor stake in Sanmar chemicals. The investment of the same is to be done through fixed and equity income securities.
About 45% of the stake was brought by Fairfax in ADI Finechem, a specialty chemical company based out of Ahmedabad for $19 million. It also acquired a majority stake in the National Collateral Management Services Ltd, for $126 million.
In the last two years, Fairfax India and Fairfax Financial Holdings has been investing in many companies with the latest being Sanmar. Prem Watsa, the Canadian billionaire is the chairperson of both the companies.
Watsa in an interview said, "The economy in Canada is about $2 trillion with only 35 million people, while India by comparison with 1.2 billion people plus has an economy of the same size. It's an unbelievable opportunity.”
Sanmar investment will give a 30% equity stake to Fairfax. Sanmar, is one of the largest producers of Polyvinyl Chloride (PVC) and also manufactures many other specialty chemicals.
Prem Watsa’s main investment is in Fairfax Financial Holdings. In 2014, he started Fairfax India with an idea to sharpen up the investment in India.
Watsa’s latest investment in India came after a week of Fairfax agreeing to buy 33% equity interest, that is $321 million in Bangalore International Airport from Infrastructure Ltd and GVK power.
Watsa said, “We just bought a 33 percent stake in the Bangalore airport, and we hope to add more over time, as that airport is going to expand. The Indian economy is going to expand; it just stands to reason that as the economy expands there will need to be more infrastructure investments."
Sanmar firms has its production units in India and Egypt. It is planning to expand its production capacity of PVC in Egypt to 400,000 tons from 200,000 tons. Once they achieve their expansion, then Sanmar is likely to have a total PVC capacity of 7 lakh tons a year, making it one of the largest producers of PVC on the global front.
