- Fairfax Financial (FFH) has announced a potential US$1.8 billion gain on its investment in Go Digit Infoworks Services
- Subsidiary Go Digit General has entered into agreements to raise $200 million in new equity shares, raising its valuation to $3.5 billion
- The transactions are expected to close in Q3 2021
- The new equity issuances will result in Fairfax recording a net unrealized gain of $1.4 billion through Inforworks’ compulsorily convertible preference shares
- In addition, the pre-tax excess of fair value over carrying value of Fairfax’s equity accounted interest in Infoworks will increase by $0.4 billion
- Fairfax is engaged in property and casualty insurance and reinsurance and the associated investment management
- Fairfax Financial (FFH) is up by 4.03 per cent and is currently trading at $558.66 per share
Fairfax Financial (FFH) has announced a potential US$1.8 billion gain on its investment in Go Digit Infoworks Services.
Go Digit General Insurance, an Indian subsidiary of Fairfax’s 49-per-cent owned Go Digit Infoworks Services, has entered into agreements with Faering Capital, Sequoia Capital India, IIFL Alternate Asset Managers and certain other parties to raise $200 million in new equity shares, raising its valuation to $3.5 billion.
The transactions are expected to close in Q3 2021.
Go Digit General’s increased valuation will result in Fairfax recording a net unrealized gain of $1.4 billion on its investment in Infoworks’ compulsorily convertible preference shares.
In addition, the pre-tax excess of fair value over the carrying value of Fairfax’s equity accounted interest in Infoworks will increase by $0.4 billion.
Foreign direct ownership in India’s insurance sector is currently limited to 49 per cent. As a result, Fairfax will record the remainder of its investment in Infoworks’ compulsorily convertible preference shares at fair value through profit.
Upon closing of the equity issuances and the Indian government’s announced increase of foreign ownership limits in the insurance sector from 49 to 74 per cent, Fairfax’s investment in Infoworks will have an aggregate market value of $2.3 billion. This will result in a gain of approximately $1.8 billion and a $61 increase in book value per basic Fairfax share.
Fairfax is engaged in property and casualty insurance and reinsurance and the associated investment management.
Fairfax Financial (FFH) is up by 4.03 per cent and is currently trading at $558.66 per share as of 11:58 am ET.