Thomas Cook India (TCI) will spin off Quess this year in a bid to enable the integrated business services provider run as an independent public company, a top official said.
Indicating this in a letter to shareholders, Prem Watsa, chairman and CEO, Fairfax Financial Holdings, which owns Thomas Cook, said the move was intended to facilitate Quess to be run independently as a public company.
“Quess has had a phenomenal run since we acquired our interest in it in 2013,” wrote Mr. Watsa. “Thomas Cook India invested $47 million in Quess in 2013, sold 5.4% last year for $97 million, and retains 49%, which is currently worth over $1 billion,’’ he wrote. “In view of the great success of Quess, Thomas Cook India intends to spin its holding in Quess out to its shareholders during 2018 so that Quess can be run independently as a public company,’’ he added. Under Thomas Cook, Quess had become large enough to be a freestanding company, he said. “Today, Quess is India’s leading integrated business services provider, With over 250,000 employees, the company has a pan-India presence with 65 offices across 34 cities along with an overseas footprint in North America, the Middle East and South East Asia. It serves over 1,700 customers across five segments – industrial, global technology solutions, people and services, integrated facility management and Internet solutions,’’ he pointed out.he said. First Thomas Cook India came under the fold of Fairfax. When Thomas Cook India acquired Quess and Sterling Resorts, the India presence of Fairfax improved substantially. Fairfax India, according to Mr. Watsa, has a market value of $2.5 billion.
India investment
“We now have approximately $5 billion invested in India, employing a total of approximately 2,85,000 people,’’ he said. Fairfax had invested in companies such as IIFC, NCMIL, Sanmar Group, BIAL, Fairchem, Thomas Cook India, Quess, Sterling Resorts, IIFL and ICICI Lomboard, among others.
“When Mr. Modi got elected in 2014, we thought, based on his outstanding track record in Gujarat, that India could be transformed by ‘‘an unabashedly business-friendly government. We are even more excited about India’s prospects today than we were in 2014. Mr. Modi’s election led us to create Fairfax India, which has just completed its third year as a public company listed on the TSX,’’ he said.
“Suffice it to say we have built a huge amount of intrinsic value in Fairfax India which is much in excess of its current market value. When after-tax profits are growing at over 30%, as they have at IIFL and other companies in India, a P/E ratio of 20x drops quickly to 9x in three years.
“We are optimistic about all our investments in Fairfax India and expect over the years to invest much more money in that country. We think the opportunity in India is unparalleled,’’ he added.
The regulation-necessitated reduction in equity interest in ICICI Lombard from 35% to 9.9% resulted in cash proceeds of $909 million-plus to Fairfax, he said.
“We continue to own 45 million shares of ICICI Lombard worth $450 million at the IPO (now worth about $550 million) resulting in an after-tax gain of $930 million,’’ he disclosed.
