hobbit

terminal 2 NatGeo doc

You can read more about it at the following link. they also talk about anchorage more time to time as a comparable https://investor.gmrinfra.com

A good proxy for BIAL valuation, GMR infra has doubled in the last few months. the only publicly listed airport conglomerate in India https://finance.yahoo.com/quote/GMRINFRA.NS?p=GMRINFRA.NS

Skeletons in closet... FIH mgmt has been pitching IIFL securities as incredibly undervalued in the annual letters but market knows better https://www.moneycontrol.com/news/business/markets/sebi-stops-iifl-from-onboarding-new-clients-for-two-years-10821761.html

Hi Viking, To buy controlling stake in IDBI, you would need close to US $2.8B . FIH would likely be a part of consortium as has been indicated here . FIH can also contemplate selling stake in NSE which can easily fetch them 200M+ My understanding regarding IDBI is that there is a ton of value that can be potentially unlocked by having a credible promoter. IDBI is a whale and merger with CSB would definitely give them scale needed to retain a talent like pralay mondal. CSB has already hired some people (CXO) from IDBI in the past 12 months so this has been on cards for a while. The depressed valuations of CSB indicates the same. I would rather FIH not touch IDBI but Prem probably will not be able to resist since this is a once in a lifetime opportunity to build a top 5 bank in India. As long as FIH does not touch its BIAL stake I am fine with it . Given the incredible aviation growth in India I would be surprised if BIAL is not worth more than $5B whenever it IPOs in the next 12 months. Next year is the election year in India so FIH might try to push the IPO through before that if markets are favorable.

FIH going for IDBI https://www.businesstoday.in/industry/banks/story/rbi-begins-evaluating-potential-bidders-including-kotak-mahindra-bank-csb-for-idbi-bank-report-377262-2023-04-13

https://www.afr.com/world/asia/iphone-maker-plans-1b-india-plant-in-shift-from-china-20230303-p5cp9f This should be a huge positive for BIAL

Fairfax has put in a bid for IDBI bank which will be their biggest bet in India so far. Unsure regarding how it will be structured wrt FFH or FIH. There is also speculation that Fairfax may form a consortium with Emirates bank

tidefall capital on Fairfax India. people are beginning to take notice https://drive.google.com/file/d/1Hx6Xr-tM9Mx3JIMPUxYayyELiAXyniTs/view

https://www.livemint.com/economy/centre-steps-in-as-airports-choke-with-record-traffic-11670866466191.html

yah understand the forex bit but not sure 0.5 billion INR is divs

The IIFL wealth transaction was announced to be for INR 14.5 billion ( $190.8 M ) but closed for INR 14 billion ($ 172 M ) . Where did $19M go?

FIH should be trading at $30 +, looking at IIFl finance, BIAL, NSE, Chemplast ...thats the fair value as of today. Alas, it may never be realized

https://www.hindustantimes.com/cities/bengaluru-news/bengaluru-airport-back-to-pre-covid-passenger-levels-101667630490581.html 1 year ahead of schedule

The Prem Watsa-owned company that runs Bengaluru airport has charted a course that has seen it grow steadily and profitably, and bridge the gap to its peers in Delhi and Mumbai. The challenge of monetizing a large expansion lies ahead Last week, Mint reported that Fairfax India Holdings Corporation, controlled by Canadian billionaire Prem Watsa, was planning to sell its 54% stake in Bangalore International Airport Ltd (BIAL). For now, Fairfax has denied this, saying it was a “long-term shareholder". Whichever way it goes, the Bengaluru airport has been a prime asset in Indian aviation as it has competed with its larger peers at Delhi and Mumbai. That’s why Watsa’s moves will be keenly watched. In the five-and-a-half years of Fairfax at the helm, BIAL has basked in profitable growth and endured a shutdown, and continued with a planned expansion despite some of its cash flows not materializing. Between 2011-12 and 2018-19 (the last full year unaffected by the pandemic), the airport registered higher growth in passenger numbers than Delhi and Mumbai, in both domestic and international segments. Bengaluru’s growth did come on a lower base, though the difference in size is more pronounced in the international segment than in the domestic segment. As a result of this higher growth, Bengaluru has bridged the gap with both Delhi and Mumbai, especially in the domestic segment. For example, in 2011-12, for every 100 domestic flights that left Delhi, 46 took off from Bengaluru. In 2018-19, this figure for Bengaluru had increased to 61 and was close to matching the 67 of Mumbai, which was constrained by capacity. The pandemic disrupted this time series and business plans. But as Indians take to the skies again, the relative growth of India’s three largest airports—which also intersects with demographic shifts—will be keenly watched. Crown jewel In Fairfax India’s portfolio, BIAL is the jewel, be it on size, visibility, returns or value to be unlocked. Fairfax India made its first investment in August 2015. As of 31 December 2021, it had invested $1.79 billion. Given the value of its listed holdings on the stock market and Fairfax’s internal estimates for unlisted holdings (like BIAL), it listed its portfolio’s fair value as $3.34 billion. BIAL accounted for 41% of the portfolio value and 46% of its underlying appreciation. In September 2021, the sale of a minority stake to a Canadian pension fund valued BIAL at $2.6 billion. Fairfax India expected a subsequent planned listing of a holding company, which hasn’t happened yet, to raise that to $2.9 billion. In its 2021 annual report, it said: “The marketability of BIAL to large pension funds and strategic global airport operators, even as an unlisted company, is very high…we believe that it [true value] could be much higher than $2.9 billion." Growth flight While Delhi and Mumbai airports were privatized in 2006, Bengaluru came up from scratch in 2008. Fairfax took over from GVK Group as the principal shareholder in 2017. The other shareholders currently are Siemens (20%), the government of Karnataka (13%) and the government of India (13%). Airports have two broad revenue streams: aero (what they charge airlines for navigation, parking, ground handling) and non-aero (rentals, shops, advertising). While a split for BIAL is not available, the company that owns the Delhi airport derived 30% of its 2018-19 operational revenue from the aero side and 70% from the non-aero side. MINT PREMIUMSee All PREMIUM FY24 capex goal may be raised to ₹10 trillion PREMIUM Tata Steel’s mixed outlook tales: Improving India, dull ... PREMIUM PMI: India’s export  cheer  on  last  legs PREMIUM Why Bengaluru airport is a prized aviation asset The decade leading up to the pandemic was one of healthy growth for Indian aviation, both airlines and airports. According to Fairfax India, between 2009 and 2019, aero revenues of BIAL grew at a compounded annual growth rate of 16% and non-aero revenues at 17%. It was also highly profitable, earning a net margin of 33-42% between 2016 and 2019, before the pandemic wrecked its numbers. Funding an expansion For BIAL, the pandemic came at an inopportune time. In December 2019, it started its second runway. To its first terminal, which handled 33 million passengers in 2018-19, it is adding a second terminal: first phase this calendar (to handle another 25 million passengers) and second phase in 2028-29 (20 million). A tripling of capacity will give it infrastructure to bridge the gap to Delhi and Mumbai further. In 2018-19, BIAL’s had revenues of about ₹1,440 crore. This was only about 38-39% of Delhi and Mumbai, which lead in international traffic. BIAL, though, does better on profitability. At the same time, its aero revenues are likely to be lower than expected as the regulator has cleared a smaller increase in per passenger fee that BIAL can charge airlines from 2022-26. Balancing expansion with growth and profitability will test BIAL in the coming years.

one has to take these speculative news articles with a grain of salt since a lot of the times in the past they have been proven to be wrong. FIH might well be exploring a sale of BIAL if they can get something north of $2B which is what they were expecting in an IPO and would be in line with the recent airport transactions in India. If they can capture most of the upside that they would get in an IPO without having to worry about approvals causing delays etc it might not be a bad idea. However investing it into IDBI might be a very risky bet. One condition to bid for IDBI is to have a minimum of $2.85 B in equity and if you combine BIAL(2B) + Fairchem(250 MM ) + IIFL wealth(190 MM) + possibly NSE(250 MM ) too + cash (200MM) , that is where FIH is headed.

sell growing BIAL, buy stressed out IDBI and try to turn it around. typical Fairfax . never learn

https://themorningcontext.com/business/the-silent-sure-rise-of-prem-watsa-in-india

https://www.livemint.com/companies/news/iifl-mega-deal-abu-dhabi-s-adia-to-pump-in-rs-2-200-cr-in-iifl-home-finance-11654794726574.html The market cap of the entire company as of today is only INR 12500 Crore ( 1.6 Billion USD) . Should be an easy 2X from here which means an additional 350M to FIH book value.

I have absolutely no doubt that BIAL airport with 2 terminals and 70M annual passenger capacity, BIAL is worth more than 4B . Sydney airport was recently privatized at 4 times that. (17B equity and 25B enterprise ). Pre-covid Sydney airport was 3x more profitable than BIAL with much worse growth profile. As Indian economy grows and passengers spend more, even a 4B valuation might look silly. I think discount arises from the perception that Indian Govt can do random stuff which could be detrimental to shareholders like they have done with the recent tariff order. India has always been a country with socialistic tendencies and only in the last 10-15 years has taken a turn towards capitalism. it will take time for the market to accept that there is no turning back from this change of stance. Modi getting reelected will certainly reinforce that. Until then BIAL is quietly building up its intrinsic value and no one knows when the gap between share price and BV will close. Omers deal is moot since omers has a 'special' relationship with fairfax which allowed them to negotiate a ratchet clause which makes it valuation questionable. But i am not worried about this at all since as long as Indian govt stays does not interfere , the value of BIAL will be realized. Even an IPO might not close this gap since this is a perception problem about the entire country, airport being a public asset. Also IIFL finance , CSB and chemplast are significantly undervalued here. Just take a look at the numbers IIFL finance posted a day ago and TCI egypt is marked at 250M on FIH books whereas its true value is closer to 1B

haha yes! if you take $9.50 as IPO (2015) price, a $30 book value today would be a 17-18% CAGR net of fees. I think if you are investing in India via any equity fund, venture , PE etc that is par for the course in terms of risk adjusted return. They have traded as high as 1.4 *BV so $30 seems reasonable to me. Given the current investments and the outlook I would be extremely surprised if they do not do 18% CAGR net of fees.

$30 + stock if BIALand Sanmar are marked accurately. They are being too conservative which is probably the right thing to do but eventually this gap will close.

Unless there is an immediate plan to use this cash for example for share buyback etc , this is not a good price. A large stake sale such as this normally comes at 20%+ premium to the trading price . IIFL wealth is doing really well as a business but there is a case to be made for buying back shares of FIH at these prices. BIAL is the fastest growing major airport in the world with a second terminal coming online at some point later this year. There is a clear path to 200M in EBITDA. I would not be surprised at all if there is a significant markup in the valuation of BIAL ( >80%) from the current 2.6B in near future barring another wave of COVID.

IMO takeover by FFH will never happen. The whole point of forming FIH was to have the flexibility to do investments that they cannot do through FFH. Also having a nice fee stream does not hurt.

Thesis on Fairfax India at MOI https://moiglobal.com/jeffrey-stacey-202201/