Share sale by large investors in Paytm, IIFL and Edelweiss before regulatory rap
₹72.03 a share for ₹261 crore, according to a Mint analysis. Less than seven weeks after Pabrai cut his Edelweiss holding by half, RBI on 29 May restricted businesses of its lending and asset reconstruction arms, citing concerns about its lending and accounting practices. Edelweiss shares plunged 11.8% to close at ₹68.35 on 30 May, a day after the regulatory action.
The shares are down 10.34% as of 7 June. Pabrai, who now owns 3.24% of Edelweiss, said he was unaware of any regulatory action before undertaking the transaction. “We were not aware of the RBI action until we read it in the media, and we have no further comment," said a spokesperson for Pabrai, when asked if he anticipated any regulatory challenges.
The sale of IIFL shares by Prem Watsa, founder of Fairfax Financial Holdings, the Toronto-based financial services firm, and whose net worth is pegged at $1.9 billion by Forbes, also coincided with the regulatory action. Fairfax India Holding’s wholly owned subsidiary FIH Mauritius Investment owned 20.18% of IIFL Finance until 21 December 2023. On 22 December, FIH Mauritius sold 5.66% shares at an average price of ₹554.6 a share, translating to about ₹1,200 crore, according to an analysis by Mint. On 4 March, RBI barred IIFL Finance from sanctioning and disbursing gold loans, after its audit found material concerns in the non-banking finance firm’s gold loan lending business.
The next day, shares of IIFL Finance tumbled 20%. From the end of trading on 4 March and 7 June, IIFL shares are down 18.5%. An email sent to Watsa, who owns 15.12% in IIFL Finance, went unanswered.
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