May 7 (Reuters) - IIFL Capital Services said

on Thursday that Fairfax India, an investment holding company

backed by Canada's Fairfax Financial Holdings ( FRFHF ), will

raise its stake in the firm to 51% through an investment of 20

billion rupees ($211.1 million).

Fairfax India will invest via its unit FIH Mauritius

Investments through a preferential allotment priced at 350

rupees per share, a 5.3% premium to IIFL Capital's closing price

on Wednesday.

Fairfax India currently holds a 30.5% stake in the company.

The capital infusion comes as domestic brokerages and wealth

managers face intensifying competition, rising technology

spending and a push to scale capital markets businesses, even as

deal activity remains uneven amid global market volatility.

The investment will strengthen IIFL Capital's balance sheet

and support its next phase of growth across capital markets,

wealth and asset management, institutional equities, investment

banking and related financial services, the companies said.

Subject to shareholder and regulatory approvals, FIH

Mauritius will have the right to nominate two directors to IIFL

Capital's board.

The transaction will trigger an open offer for IIFL

Capital's shares in accordance with Indian market regulations on

minimum public shareholding.