At 22, Prem Watsa left Hyderabad for Canada with just $8 in his pocket, despite having little desire to move abroad. More than five decades later, the 75-year-old Indian-Canadian billionaire heads Fairfax Financial Holdings, a Toronto-based insurance and investment group with around $100 billion in assets. The company has now made a major move into India’s banking sector by acquiring a 60.72% stake in IDBI Bank.
Often described as the “Warren Buffett of Canada”, Watsa has built Fairfax into a global financial powerhouse through acquisitions and a value-investing approach. His journey from a middle-class family in to the upper echelons of financial world has also been accompanied by a long-standing interest in investing in India, as per The Economic Times.
Planning for succession
After spending decades building Fairfax, Watsa has also begun setting out a plan for the company’s future leadership. According to the book The Fairfax Way, as reported by the ET, his son Benjamin is expected to succeed him as chairman. The succession plan marks the first time Watsa has spoken openly about the arrangement.
Benjamin, 46, runs Marval Capital, an investment firm that focuses exclusively on Indian stocks.
From Hyderabad to Canada
Watsa, who was born in Hyderabad in 1950 to a family of schoolteachers, completed his schooling at Hyderabad Public School before studying chemical engineering at the Indian Institute of Technology (IIT) Madras. He cleared the Indian Institute of Management entrance examination on his second attempt, but his father encouraged him to pursue higher studies abroad.
“I had zero desire to leave India. But at age 22, you listen to your dad,” Watsa said.
He subsequently moved to Canada to pursue an MBA at the University of Western Ontario. To support himself during his studies, he worked selling air conditioners and furnaces. After completing his MBA, he joined Toronto-based Confederation Life Insurance Co in 1974 as a research analyst. He was the only candidate interviewed for the position.
During this period, his mentor, John Watson, introduced him to the investment philosophy of Benjamin Graham. Graham’s focus on identifying undervalued businesses went on to influence Watsa’s own investment strategy.
The man behind the business
Despite building a major financial empire, Watsa has maintained a relatively low public profile. Fairfax remained largely out of the media spotlight during its first 15 years and began holding investor calls only in 2001. His understated approach to public life once earned him the description of “the richest, savviest guy you’ve never heard of”.
Watsa met his wife, Nalini Loganadhan, during his final year at IIT Madras. The couple have three children, including their son Benjamin. In 2020, the Indian government honoured Watsa with the Padma Shri for his contribution to trade and industry.
His approach to life is reflected in the advice he has often shared, “Work as hard as you can, as though everything depends on you. Pray as hard as you can, as though everything depends on God.”
Building the Fairfax empire
Watsa established Hamblin Watsa Investment Counsel in 1984. The following year, he acquired Markel Financial, a struggling Canadian trucking insurance company, and began turning it around. The company was renamed Fairfax in 1987, with the name derived from the words “fair, friendly acquisitions”.
Insurance became central to Fairfax’s business model. The premiums collected by its insurance operations generated funds, known as insurance float, which the company could invest in other businesses and financial assets. This approach drew comparisons with Warren Buffett’s Berkshire Hathaway, which also uses insurance operations to generate investment capital.
Watsa’s investment decisions included positioning Fairfax ahead of major market downturns, such as the 1987 stock market crash, Japan’s market collapse in 1990 and the 2008 US financial crisis. The company also suffered substantial losses following natural disasters, including hurricanes Harvey, Irma and Maria, California wildfires and the Covid-19 pandemic.
Despite these setbacks, Fairfax expanded its insurance and investment operations across markets. Its shares on the Toronto Stock Exchange have quadrupled since October 2022, the report noted.
A growing bet on India
India has remained an important part of Watsa’s investment strategy. Fairfax India Holdings was established in 2014 and has invested around $7 billion in the country. The group is planning to invest another $5 billion in India over the next five years.
Its investments include companies belonging to the IIFL Group and Sanmar Chemicals, as well as Bengaluru International Airport Ltd, in which it holds a majority stake. Fairfax also extended liquidity support to IIFL Finance during regulatory difficulties involving its gold loan business. It reduced its stake in CSB Bank following regulatory requirements.
Watsa has described India as the “best place to invest in the future”. Fairfax’s acquisition of IDBI Bank represents another significant step in its India strategy.