Home' Trinidad and Tobago Guardian : October 3rd 2013 Contents BG32 | THE ECONOMIST
BUSINESS GUARDIAN www.guardian.co.tt OCTOBER 2013 • WEEK ONE
The floodlights shoned on Prem Watsa a week ago after
his company, Fairfax Financial Holdings Ltd, floated
a tentative offer that would see a Fairfax-led consortium
take BlackBerry private.
Watsa, the third of four children, was born in 1950 near Hyder-
abad, India. His father was a teacher of English and math and
later became the principal of an excellent boys school. "My father s
parents died when he was only three," says Watsa. "He was raised
by his grandfather, who was a scholar and the first Indian principal
of the Basel Mission Theological Seminary. But when my father
was barely a teenager, my great-grandfather died and he was
placed with different relatives. He won a scholarship to Basel
Mission School and then took out a loan to go to a college run
by Jesuit missionaries. My dad was an upright, no-nonsense kind
of guy-tough, tough, tough. He expected me to work hard. He
expected me to study. If I got 90 per cent on a test, he asked me
about the other ten per cent. But my father was a great influence
on me. I will never forget one piece of advice he gave me. He
said, Work as hard as you can, as though everything depended
on you. Pray as hard as you can, as though everything depended
on God. "
Though the family had little money, Watsa, along with his
brother and two sisters, had the advantages of loving, attentive
parents. The Watsas were Christians, and church each Sunday
was also an important part of their lives. Watsa says, "I was
brought up on the Christian values of family, honesty and integrity,
and doing the right thing."
As a boy, Prem s family followed his father s career from town
to town. Once his father became a vice principal and then principal,
a great benefit was free tuition for Watsa and his siblings in the
schools where he served-some of the best in India. Watsa enjoyed
school, which was a good thing since education was highly impor-
tant to his parents. He adopted his father s drive and competitiveness
and distinguished himself as a top student. It wasn t traditional
for Indian children to work. For Watsa, his job was to do well in
school. "Classes, sports, homework, no parties, no going out---
that was my life in high school," he says. "But it was no big deal
for me. I was naturally inclined that way and I liked the struc-
In those days, schooling in India was mostly technical: biology
and sciences to produce doctors, or math, physics and chemistry
to produce engineers. Watsa strength was in math and chemistry.
He acceded to his father s advice to major in chemical engineering,
even though once he started his studies, he didn t particularly
care for engineering. Watsa applied to the highly competitive
Indian Institute of Technology (IIT), India s top engineering school.
Out of 50,000 applicants, only 1,000 were selected and Watsa
was one of them.
His years at the university from 1966 to 1971 remain among
the happiest of his life. He studied hard, played games after classes,
and managed IIT s sports teams to their first-ever inter-university
championship. He made enduring friendships. During his final
year, he met Nalini Loganadhan, whom he married a few years
By the time he graduated, Watsa decided he was more interested
in pursuing a career in business than engineering. He applied to
the best business school in the country, the Indian Institute of
Management. The school received about 10,000 applications for
only 100 openings. Watsa failed to make the cut the first time
he applied. That experience strengthened his resolve to study
harder and apply again. He worked for a year in a few jobs, studied,
and re-applied. This time he was accepted to the prestigious
By then, Watsa older brother had married a girl from England
and settled in London, Ontario, Canada. After discussing it with
his father, it was decided that a better opportunity for Watsa
might be to attend graduate school in Canada, where he could
board with his brother and sister-in-law. He left India with only
US$8 in his pocket and quickly settled in with his brother. He
found a job selling air conditioners and furnaces door to door,
which funded his MBA at the University of Western Ontario
Business School, later known as the Richard Ivey School of Business.
"Being an immigrant," he says, "you develop qualities you never
knew you had. You work harder because you re at the bottom
and the only way to go is up. I consider my children less fortunate
for not having had the immigrant experience."
A year after arriving in Canada, Watsa was able to send for his
fiancé in India. They married upon her arrival and he supported
them with his door-to-door sales job. "I wasn t very successful
at first," he reports. "But I eventually learned how to make a sale."
After earning his master s degree, Watsa began applying for
jobs. He was an immigrant competing with native-born Canadians,
and he was having a difficult time finding a position. Finally, in
1974, he was called for a second interview at Confederation Life
Insurance Company in Toronto for the position of investment
Out of four appointments that day, he was the only one who
showed up and he was awarded the job. It turned out to be a for-
tuitous appointment. His manager, John Watson, became his
mentor and taught Watsa all he knew about investing based on
Benjamin Graham s theories of value investing.
Fairfax Financial Holdings
After nine years with Confederation Life, Watsa and a few
partners founded a successful asset management firm, Hamblin
Watsa Investment Counsel Ltd. A year later, in 1985, he organised
a group of investors to take control of a small Canadian trucking
insurance company with US$10 million in premiums. That became
the base for Fairfax Financial Holdings Limited. With Prem Watsa
as its chairman and CEO, Fairfax evolved into a worldwide property
and casualty insurance and reinsurance company operating in
more than 100 countries, with $5 billion in premiums. Over the
past 25 years, Fairfax has increased its shareholders equity from
US$10 million to US$8 billion and book value per share has com-
pounded at approximately 25 per cent per year. Fairfax s stock
price has followed suit.
"From day one, I wanted to build a good company," says Watsa.
"We focused on treating our employees and customers well, and
we worked hard for our shareholders. We decided from the begin-
ning that if we were successful, then we would invest in the com-
munities that helped us. We made it a rule that one or two percent
of our pre-tax profits would be reinvested back into the communities
in which we do business. We have many employees who have
been with us for the better part of 25 years. They are terrific people
who focus on the long-term. We ve been very fortunate."
Watsa is also quick to point out that he is fortunate to have
come to North America. "There is unbelievable opportunity here,"
he says. "As long as you are willing to work hard and do something
about which you are passionate, then there is unlimited oppor-
Support of family
Watsa defines success on three levels. "First," he says, "I am
a Christian, so faith is very important. Second is my family. I ve
been married for 38 years and it s the best thing that has ever
happened to me. I have three children and I am the proud grand-
father of a baby girl. Third is my business success. The most
important principle we have in our company is honesty and
integrity. We will never compromise those values. Nor will we
ever succeed at the expense of our families. I like a quote from
the Bible, which says, "What profiteth a man if he gains the whole
world, but loses his soul? So I have worked hard to keep my
values in all that I do."
Watsa credits much of his success to a positive mental attitude.
He recalls a time when he was 21 and travelling on a train in India.
A fellow passenger gave him a book called Think and Grow Rich
by Napoleon Hill. "The book was a study of people who had
become financially successful," says Watsa. "After talking with
500 successful Americans, the author came up with this phrase,
what the mind can conceive, the mind can achieve. I took from
that that success is in your head. If you want to be successful-
in whatever field you choose-then you will be. I was very fortunate
to be introduced to that book at such a young age. It turned my
life around. Now, whenever possible, I give copies of this book
to young people I meet."
Activities and honours
Watsa is chair of the Investment Committee of the Hospital
for Sick Children Foundation, serves on the advisory board of the
Richard Ivey School of Business, chairs the Investment Committee
of St Paul s Anglican Church, and also chairs the Investment
Committee of the Royal Ontario Museum Foundation. He is also
the Chancellor of the University of Waterloo.
"My father would have been very happy to see me as chancellor
of a university," he says. "The University of Waterloo graduates
the finest engineers and has the largest math student body in the
world. I m very proud to be a part of this school. I believe education
is the way to rise above adverse circumstances. With an education,
there are no limits to what can be accomplished."
Watsa is a firm believer in the saying, "To whom much is given,
much is expected," and as a result he and his wife give of their
time and money to many philanthropic causes. (Horatio Alger
"Prem invests for the long term," said Paul Holden, an analyst
at CIBC World Markets who follows Fairfax. "He s held his major
stake now for what I would say is a fairly short period of time
relative to his investment horizon, so I would say it s probably
too early to put any score on that investment."
Watsa stepped down from the BlackBerry board in August,
citing a potential conflict of interest, as the company said it was
exploring the sale of itself and other options. (Watsa s firm struck
a deal September 23 to buy BlackBerry).
Holden said in August that Fairfax, with a market capitalisation
of Can$8.7 billion, would be too small to purchase BlackBerry
outright. The smartphone maker had a market capitalisation at
the time of Can$5.8 billion.
But others said the signs that Watsa could be working behind
the scenes were a positive.
"We have a lot of respect for the investment acumen and long-
term track record Prem Watsa has established at Fairfax," said
Todd Johnson, a portfolio manager at Winnipeg-based BCV Finan-
cial, which owns Fairfax debt.
"Hearing the announcement from BlackBerry accompanied by
Prem s departure from the board should indicate something will
happen this time on the strategic front."
Meet Prem Watsa:
The US$2b man who
plans to buy Blackberry
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