Fairfax Financial Holdings to Raise $500 Million for Africa Fund

LAGOS (Capital Markets in Africa) – Prem Watsa’s Fairfax Financial Holdings Limited is expected to raise about $500 million for its new African investment fund, attracting less than its original goal as investor interest in the region proved weaker than anticipated, according to people familiar with the matter.

The Toronto-based insurer sought to raise as much as $1 billion at $10 a share for Fairfax Africa Holdings Corp. in an initial public offering on the Toronto Stock Exchange, according to a regulatory filing in December. Fairfax said it had secured as much as $416 million in commitments for the African venture from both its own funds and partners, including the Ontario Municipal Employees Retirement System, a Canadian pension fund and CI Investments Inc., according to the filing.

The order book is expected to officially close later Monday, and the total may change as more orders are recorded through the day, the people said, asking not to be identified as the details aren’t public.

A representative for Fairfax was not immediately available for comment.

Fairfax Africa is the insurer’s second public fund focused on a specific region. In January 2015, Fairfax raised more than $1 billion for Fairfax India Holdings Corp., including $500 million in commitments from its own funds and other cornerstone investors.

Investor interest in Fairfax Africa proved more muted than its Indian fund because of political and economic uncertainty in the region, said the people.

The new African fund will invest in private and public equity as well as debt of companies operating on the continent, with a view to acquiring control or significant positions, Fairfax said in a statement in December announcing its launch.

Fairfax has made six investments in Africa, according to the regulatory filing. The company acquired a 7.4 percent stake in Commercial International Bank Egypt SAE from Actis LLP for $330 million in May 2014, the filing shows. It also made investments in agricultural company Afgri Operations Ltd., Africa Re, APR Energy and others, the company said.

Fairfax India has deployed about $1.1 billion, including acquiring a minority stake in the Bangalore International Airport in March 2016 for roughly $323 million, according to data compiled by Bloomberg.

Watsa said in a statement announcing the IPO that Africa will be transformed in the coming years by an emerging middle class, improved political stability and governance, and increased integration with global markets.

RBC Capital Markets led the share sale.