IIFL Finance stock recovers ground with 10% jump after significant 2-day slump
IIFL Finance, one of the leading NBFCs engaged in retail credit, rebounded in today's session with an intraday gain of 10%, reaching ₹420.40 apiece after the company on Wednesday announced that Fairfax India agreed to invest up to US$200 million in liquidity support amidst the recent Reserve Bank of India (RBI) embargo on the company's gold loan disbursements. "The RBI's embargo has raised liquidity concerns amongst the company’s investors and lenders.
In response to these concerns, Fairfax India has agreed to invest up to US$200 million in liquidity support on terms to be mutually agreed and subject to applicable laws, including regulatory approvals (if any)," the company said in a regulatory filing. The Canadian investment firm, led by India-born Prem Watsa, first invested in IIFL in 2011, when it acquired a 9% stake through the Hamblin Watsa Investment Counsel Fund.
Also Read: IIFL Finance share price down 20%; Jefferies downgrades the stock rating to 'hold' as gold loan ban may hurt profit In July 2015, Fairfax India made a voluntary offer to buy a 26% stake in IIFL for ₹1,621 crore, picking up an additional 21.85% stake. The group also had an economic interest of another 5.15% through derivative instruments.
Fairfax’s total shareholding in IIFL stood at 35.7% as of March 2016. Over the years, it has divested some of its stake in the company.
Also Read: RBI bars IIFL Finance from disbursing gold loans with immediate effect; shares locked in 20% lower circuit On February 05, the Reserve Bank of India (RBI) barred IIFL Finance from sanctioning and disbursing gold loans on certain material supervisory concerns. Subsequently, the stock witnessed a sharp decline of 20% in the two trading sessions that followed this
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