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Prem Watsa Sees Massive Growth Potential In India

Fairfax Financial chair and CEO Prem Watsa joins BNN Bloomberg to discuss his investments in India and the growth prospects for the South Asian country.

Investments In India

Prem Watsa: We can’t think of a better country to invest in than India

Prem Watsa: India has huge potential for growth

Fairfax Financial chair and CEO Prem Watsa joins BNN Bloomberg to discuss his investment strategy in India.

Prem Watsa, Founder & CEO, Fairfax Financial Holdings says unprecedented transformation in business resulted increased employment; corruption has been eliminated right at the top.

Prem Watsa’s Investments In India: Sees Huge Potential For Growth

Prem Watsa, Fairfax Financial Holdings Ltd. chairman and chief executive officer, discusses his strategy for investing in India’s economy with Bloomberg’s Amanda Lang on “Bloomberg Markets.” (Source: Bloomberg)

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Transcript

From Watsa’s Fairfax India has two billion dollars invested there and he's counting on big growth ahead. I spoke with him earlier this week.

You've got an economy that's now running at about two and a half trillion and in the next seven years it can become five trillion dollars. That's two and a half trillion. Our Canadian economy the whole economy is 2 trillion. So you can just see when an economy goes from two and a half to five trillion the opportunity is vital. And how do you play it. So we know we play it because we are directly invested we have invested there for 20 years. So we know it. So we created a company we thought the opportunity was so huge that we created a company called Fairfax India and we raised about a billion and a half. Now what about two and a half billion. And we invested the money in there. So it's difficult to go. If you go to India and India and invest you can buy the company. But if you go the middle market you have to be careful. Like

any country yet similar to your approach elsewhere you partner with management.

It's about the two you partner with management. We go very much oriented towards supporting good management and with a good track record and want to build the company forward. So that's what we're trying to do. Strong management good track record. And then they want to build it forward. We provided the capital. And unlike private equity we're not looking to exit in three years or five years. We'll grow with the company. And in a country like India that's huge potential to grow things grow at 30 percent 40 percent a year because of the economy growing as I said to you the last number by the way for the second quarter was eight point two percent fastest in the world fastest in the world. And that potential is perhaps closer to 10.

So what are the sectors that do best in this when you think for the long term. What sectors are you looking at.

What can you do. What sectors sectors the best sector agnostic. We go with management. So we like you as our terrific manager got a terrific track record to build the company forward. We go irrespective of we don't know commodities we don't do cyclical things we like things that you have a good you provide an essential service in India and B will support you. And what are the risks the risks are raw you know you have to be careful with your deal with it as in any investment but in a country that's higher risk that you will know but we've been dealing with so long there. So we know we've got Deepak Parekh on our board who's fantastic a very well connected. But we sell a lot of people between the companies that we have. So you have to make sure they are honest hardworking people. The risks in India is with an election next week. Mr Modi deserves to win but no one really knows. And so that's a risk. But irrespective it's a little bit of a bigger risk next year than say five years later because people are realising business is the way to go. And in India. So you've got ocracy and if you take out the social side of it meaning that's no longer possible. Little left of centre and perhaps right of centre but not extreme left where the resources are owned by the government.

People will think of India and they'll think of there's no cash policy which is a kind of a sudden shocking move.

Does that indicate kind of something or worries about the government in its approach it that the musician you might be alluding to that some would say depends on who you talk to some people say it was effective some people say a lot but a cash economy of course is susceptible to corruption. Do you use a use the word term. Recently the number of tax filers in India up 70 percent. The number of people filing taxes were up 70 percent. So it's sort of you that people are frightened now. You know that will pay our tax and move on the GST is good so it's very a lot of information on your business. So you might as well pay your taxes and move on. So I think for myself I think it's been effective and I think will be good.

The complaint I've heard about India from people like Larry is that it's never quite lived up to the potential they always think it's going to be this great golden child and it never is there as it turned.

I think it's different now because you've had 67 basically one friend. And three four generations of them ruling India with the fellow running it. And today it's come from nothing. Has a track record in one of the big States goods abroad. Five million people. 10 percent economic growth for 13 years and then he's come and got a majority in India for the whole national woman. So I think I think the potential is significant. Yeah I think this that for real. Yeah it has been for the last three or four years. And likely to continue.