DUBLIN (Reuters) - Canadian investment group Fairfax (Toronto:FFH.TO - News) could become Irish insurer FBD's (:FBD.I) second largest shareholder by September by converting a bond into equity, FBD Chief Executive Fiona Muldoon said on Wednesday.
Toronto-based Fairfax acquired a convertible bond in FBD September 2015 as part of a 70 million euro ($82 million)investment to shore up the insurer's finances.
Fairfax can convert its bond into equity from September, if the 30-day weighted average share price remains above the conversion price of 8.50 euros for 180 days.
The shares have traded above that level since November 2017 and were 0.5 percent higher at 10.40 euros by 0825 GMT after Ireland's only listed insurer reported first-half pre-tax profit up 54 percent at 18.4 million euros.
Muldoon said it seemed likely Fairfax's bond conversion would happen by next March at the latest.
Fairfax would then have 19 percent of the outstanding share capital. The company's founder, Farmer Business Developments, would see its 24.6 percent shareholding diluted to around 20 percent upon conversion.
"For a company the size of Fairfax, 19 percent isn't a destination but we'll have to wait and see," Muldoon told reporters when asked if the conversion could prompt a takeover bid.
(Reporting by Graham Fahy; Editing by Padraic Halpin)