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Hyderabad-born billionaire Prem Watsa who is the chief executive officer of the $97 billion Fairfax Financial Holdings is urging India to chase 10% economic growth. Toronto-based Fairfax is one the world’s largest property and casualty insurance companies. Watsa spoke to ET’s Mohit Bhalla exclusively on a recent visit to India during which he also met Prime Minister Modi. He described himself as a ‘fan of Mr. Modi’ during the conversation. Watsa proposed some ideas to achieve higher economic growth and advocated that free enterprise on the scale of America would solve the country’s problems. Fairfax Financial Holdings owns controlling stakes in Bangalore International Airport, Thomas Cook India, Quess Corp, GoDigit Insurance and CSB Bank apart from a bunch of other companies in India. Edited Excerpts….
You met with the Prime Minister on your visit. What did you say to him?
I said India is blessed to have you as a Prime Minister. He has made India very strong. Now he is the only one who can deliver 10% economic growth annually. And if you do it for some time, it will be in-bred and will continue with the next person. This will help the Prime Minister meeting his 2047 goals for India. Korea, Japan, Taiwan did it for decades! And we have got a lot of smart, hardworking people here. No reason why one cannot accomplish it under his leadership.
What stimulus is required to achieve that sort of target?
Small things. But one thing that the PM wants to do anyway is improve the ease of doing business. In Canada and the United States, you won’t believe how easy it is to do business. Unbelievable. You set up a company, you fail, no problem. Immediately you can raise more money. It’s not a big deal that you failed and so ease of doing business. You need regulation but more to help businesses. Who provides all the jobs? Businesses. There used to be socialism and all that. That’s all gone and it should never come back. But businesses have to be encouraged. Mr Modi has done a fantastic job and now he plans to make it even more easy which they are working on.
What else do you have on your mind?
Secondly, he (Modi) had said this years ago and I participated in a thing about privatization. Privatize the companies. He said it beautifully. We don’t know how to run the companies. Put them in the private sector, he said. We get the money to spend it on education on health nutrition all the other things that governments do but they cannot be running a business. That’s a vestige of the past. So that’s the second one – privatization
Finally, I like tax free zones and international law so you don’t get caught up in all the domestic stuff to change your rules and labour regulations is very difficult. So you earmark this area is like free. It’s happened in China, Pudong was nothing and if you were to see Pudong today it will blow your mind.
The PM has already done Gift City and he will do more!You sold some Fairfax Financial stock that you personally owned back to the company in May. You clarified then that the company was not for sale….
I tell my shareholders in the US there were 6000 companies listed in 1985 when Fairfax went public.Of those same 6000 companies…how many exist today? 600. Bankruptcy, takeover, whatever, they’re gone…only 10% survived. Then you say how many did well? How do you define well? I’d define that as compounding the stock price by 15% for 38 years. Only 58 companies did this, less than 1% …60 means 1%…and Fairfax is ranked 20th.
But it’s always about building for the long term and I’m not going to sell it. It will always be professionally run. My kids will be at the top in terms of making sure our culture goes well but my kids have their own business. My son Ben loves India. He’s a money manager and all the money he manages he puts into India
You have deployed $7 billion in India and committed to invest $7billion more. What is your game plan?
We have some smaller companies and they are very entrepreneurial. Their founders have run it for 10 or 15 years so we’ll buy a portion of them. Fairfax was built with 10 million dollars and we built it over the long term and it now writes $33 billion in premiums all over the world and is one of the biggest companies in the world.
Shareholders equity was 10 million dollars and now its 22 billion dollars
The investment portfolio used to be 25 million dollars and now its 66 billion dollars
Our long term plan is waiting for the telephone to ring and it rings.
In the Middle East, we have been partners with our friends (Gulf International Group) there since 2010. We got the largest middle eastern property casualty company. We have 44 percent and they have 46 per cent.
They called and said about two years ago. Look we want to sell, and you’re the perfect buyer. We negotiated and we bought it and now own almost 100 %. We write 3 billion dollars in about 12 countries in the Middle East.
The Indian opportunity is massive but you have to wait for the right people with the highest integrity.
You think India needs a mindset change to chase the growth it needs?
Lee Kuan Yew (Singapore’s former Prime Minister) was asked 15 years ago. America is reaching the peak? America’s peak on the way down?
He said absolutely not. For two reasons. It is the most entrepreneurial country in the world. That’s one. Second, you and I can become American
You go there and Satya Nadella, you know, did. He’s an immigrant now running one of the biggest companies in the world, Microsoft.
What they have is free enterprise. And India is getting it in spades. Make in India, StartUp India all of these programs by the PM are outstanding. And I think the PM will deliver 10% economic growth.
What do you think of geo-politics with the situation in the middle east and its economic fallout?
It can develop. Ukraine Russia war can become worse. Israel and Hamas can become worse. What you need is a very strong America. Only America in my view can stop all this. It’s a big economy has a big military and you need a strong person as president, you need a very strong leader in the US.
India and Canada have moved into extreme positions in relations, expelling diplomats. What do you make of that as a Canadian citizen with Indian roots?
I’ve never been involved in politics and so I’ll leave it at that
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