hobbit

I thought the plan for Helios was that partnering with Fairfax will give them more cred in the global market and help them with fund raising at their end . This is just asking Fairfax for money right after the close. and why is Fairfax bothered with Helios' second best ideas ( the first will go to the helios' fund I presume ) . Fairfax can get better exposure by investing directly in Fund 4 of Helios. And Fairfax has to underwrite the ' reference investments' ? why is that... what a mess...

V what is the based on ? The difference between the old valuation and the one just announced ;) Thanks ... haha Didn't realize it was that big and it was re-valued recently. Thought it was a walnut size investment. Actually, i remember now that Amazon was also an investor in it (small amount). 09/30/2019: $100-$500 million valuation 12/10/2020: $800-$900 million valuation 01/15/2021: $1.9 billion valuation Mind you, these unholy valuations are in the age of low interest rate. Was there a strategic rationale that you recall as to why Digit was not part of FIH's portfolio ? Good news is that tomorrow, is the ex-dividend date, so if the share price was being bid up by unholy traders bent on capturing the jumbo-dividend, that should take some wind out of its sail. On a different note, for the hope-FFH-sell/trim Blackberry crowd. Imagine if BB was a private company (wholly owned by FFH), you wouldn't see any of these emotions and reactions. When was the last time anyone here complained about AGT Food strategy on a quarterly basis. The fact is BB had to transition from a $20 billion phone business into $+1 billion software business all in a public forum for all to see as it went 2 steps forward, 1 step back, but always moving forward. That and also it is not that there are no suitors. There is always a buyer at a price. Chen's job is to complete his job before being able to sell it at a valuation worth of its potential (if needed) for an agreed upon purchase price. As per this article FIH is an investor in Digit. I dont think FIH has mentioned this anywhere though https://www.vccircle.com/fairfax-a91-partners-backed-digit-insurance-is-india-s-newest-unicorn/

Fair to assume Bangalore airport deal with OMERS did not close this quarter ? or they would have provided an update

https://ca.finance.yahoo.com/news/atlas-mara-limited-announces-strategic-155000677.html The transaction will include upfront cash consideration payable at closing equal to approximately 0.8 times book value as of 30 June 2020, plus additional cash consideration payable 24 months after closing of the transaction, subject to certain conditions. https://www.benzinga.com/pressreleases/20/11/ac18543273/atlas-mara-limited-announces-strategic-transaction-with-kcb-group-plc As part of the Transaction, KCB will acquire Atlas Mara's 62.06% shareholding in Banque Populaire du Rwanda Plc ("BPR") for cash consideration representing approximately 1.09 times book value and, through the Company's subsidiary ABC Holdings Limited, all of Atlas Mara's indirect interests in African Banking Corporation Tanzania Limited ("BancABC Tanzania") for cash consideration representing approximately 0.42 times book value. The actual cash consideration payable by KCB will be determined based on the final book value of the two banks at completion of the transactions. The transactions are expected to close during the first half of 2021, assuming regulatory approvals are received by then. https://www.bnnbloomberg.ca/nigeria-s-biggest-bank-in-talks-to-buy-atlas-mara-assets-1.1530545 Do not be surprised if this happens close to BV as well which leaves them with UBN and following are the latest results for the same https://thenationonlineng.net/union-bank-grosses-n118-8b-in-q3/ Chief Financial Officer, Union Bank of Nigeria (UBN) Plc, Joe Mbulu noted that the bank’s asset quality has continued to improve with non-performing loans (NPLs) down to 3.6 per cent from 5.8 per cent as at December 2019, supported by ongoing efforts to diversify loan book to include viable businesses and households. “Our Capital Adequacy Ratio remains robust at 19.5 per cent, well above the regulatory threshold. With the $40 million financing secured from the International Finance Corporation for on-lending to trade finance customers, we are continuing to expand our funding engagements with DFIs to support our strategic business initiatives. Again not surprised with zero transparency from FFH and FAH mgmt on why ATMA was sold to FFH for 0.25*BV except saying helios did not want it . FAH is leaving close to 100 mil on the table by doing this deal with Helios which brings only 5 mil to bottom line for now on annual basis. If Helios was so keen on partnering with FFH , they could have done this deal with Helios and kept ATMA at the same time . They can sell it for 40 mil whenever they want or much more if they market it properly. And moreover FFH is only paying 20mil upfront. What a joke. I do not know why helios did not want it , may be they got the jitters after the deal with Equity group fell through. The only explanation is that FFH benefits at the expense of FAH shareholders and no one seems to care since there is no 'smart' money in FAH to seek an explanation from FFH.

https://www.business-standard.com/article/finance/explained-how-the-kerala-based-csb-bank-made-a-dramatic-turnaround-120111801497_1.html Essentially - New Mgmt with Fairfax appointed CEO Sacked around 1200 people , average age of employees dropped from 50 to 36, productivity went up . Labour cost to income was 26 % as compared to industry average of 10 . it came down from 26 to 15 % in 1.5 years Cut down on corporate lending , increased focus on retail ( gold ) and SMEs . Had earlier struggled with high NPAs in corporate lending Forecasting growth of 25% and looking to acquire another mid sized bank

Michael Wilkerson in Annual Letter , Q1 investor call , ATMA earnings -- - Tangible book value of $2 ( June 2020 ) - UBN doing well even in COVID. NPAs stable -"All operating banks maintained capital adequacy ratios above the regulatory minimum, reflecting stable balance sheets." ( june 2020 ) Michael Wilkerson in circular - - happy to sell ATMA stake at 0.55 without ever trying to market it to a third party apart from Fairfax. And since its a related party transaction they need a majority of minority shareholder to approve this. - The reason Fairfax is paying 40mil is because they cannot pay more than 25% of market value of FAH without a formal valuation , this being a related party transaction. Its hard to imagine a scenario where they try to sell their stake at a 50% discount to TBV and there are no takers . But they didn't even try. "MI 61-101 provides that, unless exempted, an issuer proposing to carry out a related party transaction described in paragraphs (a) through (g) of the definition of “related party transaction” is required to obtain a formal valuation in respect of the transaction. Fairfax Africa is relying on the formal valuation exemption in section 5.5(a) of MI 61-101 given that, at the time the Atlas Mara Transaction was agreed to, neither the fair market value of the subject matter of, nor the fair market value of the consideration for the Atlas Mara Transaction, exceeded 25% of Fairfax Africa’s market capitalization." Moreover Michael Wilkerson/Prem has taken 'zero' responsibility for the destruction of shareholder capital. Not in one annual/interim report/call the mgmt has admitted that they made terrible investments one after the other. Until announcing this deal they have maintained ( until as recently as April 2020 call) that the prices are just depressed and provide no insight into the intrinsic value of businesses. I don't understand on what basis Mr Wilkerson is being retained as an executive chairman of the new entity. As per the circular Helios brings the the depth and local connections including knowledge of french which is now apparently necessary for making good returns in Africa ;D. Idk on what basis was the current mgmt investing in Africa if as per the circular they had such limited knowledge of African market . This situation provides a good deal of insight into the muddled thinking at Fairfax group where they have been blaming market for being overvalued over the past decade while investing in gems like BB, ATMA, RFP, CIG etc . No wonder their shares are being sold at a 50% discount to BV across FFH, FIH and FAH. They have given market no reason to believe that they are trustworthy , transparent and will actually admit/learn from their mistakes going forward. Contrast this behavior with someone like Pabrai who has also had pretty underwhelming returns over the past 3 years but admits to his mistakes openly in letter and hopes to draw some lessons.

https://www.moneyweb.co.za/mny_sens/consolidated-infrastructure-group-limited-cautionary-announcement-and-changes-to-the-board-of-directors/ All Fairfax Africa nominated directors resigning from CIG

https://www.business-standard.com/article/economy-policy/cargo-traffic-at-bangalore-international-airport-rises-139-in-h1-fy21-120102101095_1.html

Lets assume deal does not happen, whats the downside at these prices with 100 + 40 mil in cash and zero debt I think you're referencing cash & equivs from the 2019 annual report. Their position is radically different now. During the financial panic earlier this year they basically had to step in as the de facto Federal Reserve for their bank investees. Now their cash & equivs position is down to $68 million of unrestricted cash (and an additional $18 million of restricted cash - locked in bank accounts at investee banks to help them avoid being forced by regulators to raise super-expensive capital). Regarding downside risk of a failed Helios deal I think you have to look at: - liquidation value of the assets after a failed deal - future value of assets in a deteriorating portfolio that has been poorly managed since inception (improperly sized investments in geographies and businesses outside of management's circle of competence) - odds Prem will either liquidate the portfolio and return more cash to shareholders than the current market price, or find new management that can shore up the portfolio and better execute the Africa investment strategy. If the Helios deal fails you might be able to make the case for a liquidation value of as much as, say, $325 million. But, I don't think there's as much margin of safety as you might think. I think the portfolio is basically one negative economic shock - like war or another oil price collapse - away from being impaired to $225 million or less. Also, the portfolio's current manager is not right for the job, but how do you attract a new management team with the requisite talent to manage such a small portfolio? I'm assuming you would need at least a billion dollar portfolio to attract/compensate an effective management team. Further, how would Prem be able to raise a billion dollars to right-size the portfolio given the failed track record? Honestly, I think Prem pretty much HAS to either do the deal with Helios or liquidate ASAP - and both sides know it. I think Prem and Tope are reasonable and will deal fairly with each other. But, I think Prem is in a tough situation. Does he give up majority control (I doubt it, but it might be the best solution)? Does he commit Fairfax to buy/guarantee more of the assets (tough call)? Does he infuse more cash into FAH by issuing more FAH shares - diluting current owners (another tough one)? After all those considerations my opinion is the range of outcomes is too broad for FAH to be a sound investment for a minority equity owner. I think there are plenty of scenarios resulting in permanent loss of capital, thereby making this a value investing anathema. (PS. I'm going to feel REALLY dumb when this deal sails through as it was originally laid out and the stock price jumps 50%. Haha. Oh well.) one of the conditions of closing " As of immediately prior to Closing, the Buyer Entities shall have Cash equal to at least the sum of $102,000,000, including Cash deposits held at any Portfolio Investment of the Buyer, plus the undrawn amount under the Atlas Mara Facility less any Transaction Expenses paid for by any Buyer Entity prior to such calculation of Cash;

Lets assume deal does not happen, whats the downside at these prices with 100 + 40 mil in cash and zero debt

This is FAH purchasing their own shares. They have not done that since april 2020. FFH acquiring shares of FAH in open market is a good sign for the deal.

Why’s 2099 shares a day the magic number? Are they limited (as the issuer would be for an NCIB)? Capped at 25% of daily average trading volume

https://www.canadianinsider.com/company?ticker=FAH FFH buying more FAH in the past couple of months

It will also be important to see whether OMERS renegotiates the valuation of the airport or goes ahead with 2.7B. The transaction is supposed to close by the end of Q3 2020. Why would OMERS renegotiate? They get a free look at the upside, and FIH makes them whole with a bigger ownership if the IPO doesn't price out. In many ways, the deal could be spectacular for them as written. If things stay slow for the duration of their option, they will end up with a bigger percentage of an irreplaceable infrastructure asset at a deep cyclical low price. Because the ratchet clause only kicks in if the valuation goes below 1.3B in an IPO which in very unlikely even in a worst case scenario. Also OMERS 'upside' in a worst case scenario is capped - " It is intended that Anchorage will be listed by way of IPO in India by December 2021 using commercially reasonable efforts, subject to regulatory approvals and market conditions. The third party investor will receive incremental shares of Anchorage to compensate for the amount by which the valuation of Anchorage upon closing of the IPO is below approximately 91.6 billion Indian rupees (approximately $1.3 billion at period end exchange rates). For any IPO valuation lower than approximately 70.3 billion Indian rupees (approximately $1.0 billion at period end exchange rates), the third party investor will receive no additional incremental shares of Anchorage. " Given that all the publicly traded airports ( except china) are down 30-50% , OMERS can ask for a lower valuation around 1.8 - 2B

It will also be important to see whether OMERS renegotiates the valuation of the airport or goes ahead with 2.7B. The transaction is supposed to close by the end of Q3 2020.

Thats excatly the point. Its a messy deal and could use with far more transparency like a shareholders call or a disclosure explaining why it had to be done. Its not like FAH is running out of time with 100 mil in cash and zero debt.

Yep, the BB shareholders are up in arms. I guess their underlying assumption was that either BB doesn't need the liquidity or that there is a long line-up of potential lenders who would be prepared to lend a half-billion at 3.75% with no conversion privilege. I am from the school of thought that FFH's last note flotation was at 4 5/8%, so if that's what FFH pays for debt, what should a riskier outfit like BB pay? Maybe 7%? Seriously, a 15 minute walk through their financials for the past 3 or 4 years is enough to make a guy want to puke. Maybe there is a long line-up of outfits wanting to lend money to companies that have drastically transformed their business and are cashflow negative? I don't see it, but I've been wrong plenty of times before... SJ Blackberry shareholders are still up in arms about this: https://www.newswire.ca/news-releases/concerned-shareholder-objects-to-blackberry-s-related-party-transactions-with-fairfax-851354230.html SJ Your prior actions tend to form your reputation... "Fairfax and Mr. Watsa have a history, when presented with a conflict of interest, of working against the interests of minority shareholders and for the benefit of Fairfax. In September 2019, the Québec Superior Court rendered a judgment in which it found that Mr. Watsa and Fairfax, as insiders of Fibrek Inc., acted in a "blatant conflict of interest situation" for the benefit of Fairfax by enabling the acquisition of Fibrek at the "lowest cost possible," to the detriment of Fibrek's minority shareholders who were bought out at an unfairly low price. The Court also found that despite the trust and confidence Fibrek placed in Mr. Watsa and Fairfax, Mr. Watsa purposely refrained from disclosing Fairfax's true intentions to Fibrek management." Your prior actions tend to form your reputation! More examples please, because if you are going to point to 2 transactions out of some 300-400 conducted over 30 years...please! The only reason Blackberry is even around is because of Prem putting John Chen in charge. Cheers! Its not just 2-3 transactions..look at what they are doing with Atlas Mara. In May2020 ATMA controlled by fairfax reported tangible book value around 2.50 and now they are selling it to themselves for 40 cents . with zero explanation. They gave a ratchet clause while jacking up value of bangalore airport. With no explanation. There is a reason market does not trust them anymore . FIH, FAH trading at 50% of reported BV and FFH probably off 20-25% too. Given that ATMA is trading at 32c, are you suggesting they underpaid or overpaid? Bearing in mind there are minorities on both sides of the transaction? ATMA is controlled by FairfaxAfrica , ATMA reports a tangible book value of $2.50, Wilkerson who is incharge both at ATMA and Fairfax africa defends the book value in annual reports, AGM 2020 call and at ATMA earnings. At the same time there is a transaction going on where they are happy to sell ATMA for 40 cents to FFH. FFH gets the asset at 0.25 * TBV which helps them make up for losses in Fairfax Africa investment. Farifax Africa shareholders get screwed. or Helios, their new investment guide in africa, really wants ATMA off the books and they are happy to sell it to FFH even at 0.25*TBV since they see no value in the equity. FFH screw their own shareholders by buying a worthless asset for 40M. or Tangible Book Value of ATMA was always overstated and was being falsely being defended by Wilkerson and co. Either of these scenarios does not make Fairfax paragon of transparency or ethical behaviour Or, Fairfax see value, Helios don’t, so they transfer at/above market, thereby doing ok by both sets of minorities. There are better examples of Fairfax being less than perfect. Prem Watsa - chariman of FFH and chairman of FAH..you cannot have it both ways

Yep, the BB shareholders are up in arms. I guess their underlying assumption was that either BB doesn't need the liquidity or that there is a long line-up of potential lenders who would be prepared to lend a half-billion at 3.75% with no conversion privilege. I am from the school of thought that FFH's last note flotation was at 4 5/8%, so if that's what FFH pays for debt, what should a riskier outfit like BB pay? Maybe 7%? Seriously, a 15 minute walk through their financials for the past 3 or 4 years is enough to make a guy want to puke. Maybe there is a long line-up of outfits wanting to lend money to companies that have drastically transformed their business and are cashflow negative? I don't see it, but I've been wrong plenty of times before... SJ Blackberry shareholders are still up in arms about this: https://www.newswire.ca/news-releases/concerned-shareholder-objects-to-blackberry-s-related-party-transactions-with-fairfax-851354230.html SJ Your prior actions tend to form your reputation... "Fairfax and Mr. Watsa have a history, when presented with a conflict of interest, of working against the interests of minority shareholders and for the benefit of Fairfax. In September 2019, the Québec Superior Court rendered a judgment in which it found that Mr. Watsa and Fairfax, as insiders of Fibrek Inc., acted in a "blatant conflict of interest situation" for the benefit of Fairfax by enabling the acquisition of Fibrek at the "lowest cost possible," to the detriment of Fibrek's minority shareholders who were bought out at an unfairly low price. The Court also found that despite the trust and confidence Fibrek placed in Mr. Watsa and Fairfax, Mr. Watsa purposely refrained from disclosing Fairfax's true intentions to Fibrek management." Your prior actions tend to form your reputation! More examples please, because if you are going to point to 2 transactions out of some 300-400 conducted over 30 years...please! The only reason Blackberry is even around is because of Prem putting John Chen in charge. Cheers! Its not just 2-3 transactions..look at what they are doing with Atlas Mara. In May2020 ATMA controlled by fairfax reported tangible book value around 2.50 and now they are selling it to themselves for 40 cents . with zero explanation. They gave a ratchet clause while jacking up value of bangalore airport. With no explanation. There is a reason market does not trust them anymore . FIH, FAH trading at 50% of reported BV and FFH probably off 20-25% too. Given that ATMA is trading at 32c, are you suggesting they underpaid or overpaid? Bearing in mind there are minorities on both sides of the transaction? ATMA is controlled by FairfaxAfrica , ATMA reports a tangible book value of $2.50, Wilkerson who is incharge both at ATMA and Fairfax africa defends the book value in annual reports, AGM 2020 call and at ATMA earnings. At the same time there is a transaction going on where they are happy to sell ATMA for 40 cents to FFH. FFH gets the asset at 0.25 * TBV which helps them make up for losses in Fairfax Africa investment. Farifax Africa shareholders get screwed. or Helios, their new investment guide in africa, really wants ATMA off the books and they are happy to sell it to FFH even at 0.25*TBV since they see no value in the equity. FFH screw their own shareholders by buying a worthless asset for 40M. or Tangible Book Value of ATMA was always overstated and was being falsely being defended by Wilkerson and co. Either of these scenarios does not make Fairfax paragon of transparency or ethical behaviour

https://www.forbes.com/sites/antoinegara/2020/04/13/how-a-goat-farmer-built-a-doomsday-machine-that-just-booked-a-4144-return/#63887ea3b1ba

Yep, the BB shareholders are up in arms. I guess their underlying assumption was that either BB doesn't need the liquidity or that there is a long line-up of potential lenders who would be prepared to lend a half-billion at 3.75% with no conversion privilege. I am from the school of thought that FFH's last note flotation was at 4 5/8%, so if that's what FFH pays for debt, what should a riskier outfit like BB pay? Maybe 7%? Seriously, a 15 minute walk through their financials for the past 3 or 4 years is enough to make a guy want to puke. Maybe there is a long line-up of outfits wanting to lend money to companies that have drastically transformed their business and are cashflow negative? I don't see it, but I've been wrong plenty of times before... SJ Blackberry shareholders are still up in arms about this: https://www.newswire.ca/news-releases/concerned-shareholder-objects-to-blackberry-s-related-party-transactions-with-fairfax-851354230.html SJ Your prior actions tend to form your reputation... "Fairfax and Mr. Watsa have a history, when presented with a conflict of interest, of working against the interests of minority shareholders and for the benefit of Fairfax. In September 2019, the Québec Superior Court rendered a judgment in which it found that Mr. Watsa and Fairfax, as insiders of Fibrek Inc., acted in a "blatant conflict of interest situation" for the benefit of Fairfax by enabling the acquisition of Fibrek at the "lowest cost possible," to the detriment of Fibrek's minority shareholders who were bought out at an unfairly low price. The Court also found that despite the trust and confidence Fibrek placed in Mr. Watsa and Fairfax, Mr. Watsa purposely refrained from disclosing Fairfax's true intentions to Fibrek management." Your prior actions tend to form your reputation! More examples please, because if you are going to point to 2 transactions out of some 300-400 conducted over 30 years...please! The only reason Blackberry is even around is because of Prem putting John Chen in charge. Cheers! Its not just 2-3 transactions..look at what they are doing with Atlas Mara. In May2020 ATMA controlled by fairfax reported tangible book value around 2.50 and now they are selling it to themselves for 40 cents . with zero explanation. They gave a ratchet clause while jacking up value of bangalore airport. With no explanation. There is a reason market does not trust them anymore . FIH, FAH trading at 50% of reported BV and FFH probably off 20-25% too.

https://www.vccircle.com/canadian-fund-likely-marks-down-bangalore-airport-valuation-as-it-takes-bigger-stake/

perhaps neither ABX nor FAH, lets go with Jumia with a $600 million market cap. :-) Fire and forget. See you in 2030. i am not as knowledgeable as everybody else when it comes to FAH, but here some broad strokes from an average joe who has been watching the collapse of Fairfax Africa in slow motion; and lets call it what it is, a collapse: - FFH with all its deep bench, simply didn't not have the needed overhead to support such a far flung operation. There is no shame into that. A lot of companies stay away from what they do not know. When was the last time, you saw a job opening on FFH looking for local talent in Africa to feed its investment vehicle. - it is fine that FAH is permanent capital, therefore not exposed to the same pull as say PE would be when client start to pull in their money, before the investment plays out. But even permanent capital is not immune, when it is trading on the market as an investment vehicle and the message that it sends when the stock takes a massive hit. What was wrong planting these seeds in Africa as part of FFH (and I believe in Africa), rather a separate permanent capital vehicle. - there was no reason for FFH to create FAH and FIH at the same time when it did. I understand FIH, given their historic exposure in India. They could have kept FAH within FFH for a while longer. - i have said this in the FIH thread, the FIH/FAH needed to have some management fee stream that gives their respective management ammunition to deploy. in absence of that the only other two source of cash is either selling a crown jewel at the wrong time or issuing stock at the wrong time. i think issuing debt without having a cash inflow to pay the interest not feasible either. FWIW, I think FAH was earning maybe $20 million of interest annually. Though, I think much of it was paid in kind (or rolled into additional principle) in recent months. FAH had over $100 million of bonds, loans, and guarantees. Most earning double digit interest rates. (Much of the interest coming from ATMA.) I get the sense FFH’s buying back ATMA was a deal concession. I look at it as a $40 to $80 million dollar pot sweetener. Neither FFH nor Helios needed any more risky financials on their books - they both have plenty. And, you know ATMA is risky because Wilkerson is the chairman of ATMA’s board. Wilkerson has COMPLETE visibility into ATMA. I’m talking daily updates on loan losses/forbearance. If ATMA was a guaranteed success Wilkerson could have convinced Helios to take it. But, he didn’t, which means ATMA is a big question mark. I guarantee there are tons of bad debts piling up. And, the prognosis goes something like this... if energy demand, travel, and life in general return to normal in the next 6 to 12 months then ATMA will probably work out ok, but if it doesn’t then we’re probably impairing this sucker big time. Remember, ATMA was already a red flag when it asked to defer interest payments back in December - even before Covid emerged as a threat. No doubt FAH’s Wilkerson has plenty of IQ. A Harvard MBA and a masters from Yale is ample evidence. I have a hunch his experience with CIG and ATMA will propel him to world-class turnaround expert status. And, I’m sure he is experiencing a lifetime’s worth of stress these days. But, concentrating $500+ million into a falling knife bank holding company, a horrendously mismanaged infrastructure company, a startup education company, and a couple AGH spin offs was a terrible rookie mistake - fueled by impatience, lack of discipline, and unawareness of one’s circle of competence. (The blame can be shared by Wilkerson, FFH’s investment team, and FAH’s board.) The whole fiasco was a hope strategy that didn’t work out. From what I’ve gathered in a few hours of digging, Helios is much more in line with the type of investment manager you would expect of a partnership with a reputable billionaire like Prem. Being the largest, fastest growing, savviest Private Equity group in Africa comes with plenty of competitive advantages. (I’m intrigued by the little I’ve learned so far about their growth, telecom business, and dollar denominated credit operation.) My gut says Helios got wind that Prem was looking for a new investment manager for FAH. I suspect Helios has plenty of investment opportunities that could thrive with more access to dollar bills. I suspect Helios was aware of FAH’s large cash position, and skillfully and compellingly made Prem aware of what Helios could do with a couple hundred million of extra US dollars (remember, Africa does not have access to the Federal Reserve’s dollar swap lines. There has been a run on dollars, and African business is a fish out of water without dollars.) I suspect Helios said to Prem something along the lines of “if you not only give us control of FAH’s $140 million of cash & equivs, but also kick in an extra $40 mil while taking ATMA’s risk off the table, we already have the breadth of opportunities and knowledge (aka more ideas than capital) to immediately deploy US dollars so incredibly profitably that investing in Africa during its 40% off sale will feel even easier than investing in US equities in the 1970’s.” Prem says “where do I sign the check?” I do not know if you were on the call for AGM 2020 and heard Prem and Michael's comments when they were asked point blank if there is any stress in any of the businesses including ATMA or CIG...their response was basically that their internal tests indicated that businesses will be able to manage on their own apart from the 40mil to ATMA . Prem called the share price at 3$ an absolute joke . They basically cannot sell at ATMA for 40 mil to a related party without marketing the business independently to the market. UBN stake alone could have easily fetched 80-100mil . I hear what you're saying on ATMA. I think if the ATMA transaction was done in isolation (not as part of a broader deal with Helios), without additional explanation, it would raise red flags - and maybe even spark some legal activity. But, it's clearly a deal concession. Fairfax and Helios both well know the importance of speed when it comes to doing deals. I suspect that during the diligence process Helios couldn't pinpoint the value of ATMA (especially with recent devaluations, and with so much of the equity stakes collateralizing debt). Helios probably considered selling it post-transaction, and realized it could be a nightmare, especially since the recent deal had collapsed. I have a hunch Helios had conversations with the parties involved in the prior deal that fell through (I feel like Fairfax would allow those types of discussions), and probably with other potential buyers, none of which alleviated concerns related to ATMA. My guess is Helios raised ATMA as a deal breaker. Fairfax wanted to salvage the deal, had to think quickly, probably considered multiple solutions, and proposed taking most of the ATMA risk off the balance sheet by buying it at ATMA's public market value. There were alternative solutions; - Fairfax could have offered to infuse more cash by buying more shares of FAH at around $3.00 per share - they could have offered to loan FAH money - they could have offered Helios more equity in the deal, etc. I think Fairfax recognized the value of a partnership with Helios, knew they needed a quick solution specific to ATMA, and probably did the right thing to salvage the deal. I think this deal de-risks FAH big time. I think it's win win for Fairfax and Helios. I think Helios will leverage this relationship to launch a few $3 to $5 billion funds over the next decade, which will gush cash into the new FAH (Helios Fairfax Partners - HFP). I think HFP will provide a lot of visibility into how Helios performs, which will be reviewed by potential investors in their PE deals, so Helios will have plenty of incentive to assure HFP performs very well. Assuming Helios can continue drumming up value in Africa for years to come this deal should create a virtuous cycle for HFP owners and for Helios's partners. If it turns out Helios is more skilled at raising funds than investing profitably, then at some point HFP will languish. If that happens Fairfax still has control. So, at the current price, over the next decade, I see this as landing somewhere between an investment that languishes (but, doesn't go to zero unless we see crazy leverage introduced), and maaaaybe a 10 bagger if Helios rides a wave of strong African economic growth, strong investment performance, and strong fund raising. I agree with you broadly and things could have very well gone down that way. But the least FAH mgmt could have done is explain why they couldn't liquidate their stake in a public company(UBN) worth 180 million dollars for even 100mil. Were there no takers at a 50% discount to the current share price? and top of that no color on the financials of helios makes it very hard to give them the benefit of doubt. Michael Wilkerson is incharge both at ATMA and FAH and gives a sweetheart deal( based on the info they shared) to the people who hired him without any explanation does not the pass the smell test at all.

perhaps neither ABX nor FAH, lets go with Jumia with a $600 million market cap. :-) Fire and forget. See you in 2030. i am not as knowledgeable as everybody else when it comes to FAH, but here some broad strokes from an average joe who has been watching the collapse of Fairfax Africa in slow motion; and lets call it what it is, a collapse: - FFH with all its deep bench, simply didn't not have the needed overhead to support such a far flung operation. There is no shame into that. A lot of companies stay away from what they do not know. When was the last time, you saw a job opening on FFH looking for local talent in Africa to feed its investment vehicle. - it is fine that FAH is permanent capital, therefore not exposed to the same pull as say PE would be when client start to pull in their money, before the investment plays out. But even permanent capital is not immune, when it is trading on the market as an investment vehicle and the message that it sends when the stock takes a massive hit. What was wrong planting these seeds in Africa as part of FFH (and I believe in Africa), rather a separate permanent capital vehicle. - there was no reason for FFH to create FAH and FIH at the same time when it did. I understand FIH, given their historic exposure in India. They could have kept FAH within FFH for a while longer. - i have said this in the FIH thread, the FIH/FAH needed to have some management fee stream that gives their respective management ammunition to deploy. in absence of that the only other two source of cash is either selling a crown jewel at the wrong time or issuing stock at the wrong time. i think issuing debt without having a cash inflow to pay the interest not feasible either. FWIW, I think FAH was earning maybe $20 million of interest annually. Though, I think much of it was paid in kind (or rolled into additional principle) in recent months. FAH had over $100 million of bonds, loans, and guarantees. Most earning double digit interest rates. (Much of the interest coming from ATMA.) I get the sense FFH’s buying back ATMA was a deal concession. I look at it as a $40 to $80 million dollar pot sweetener. Neither FFH nor Helios needed any more risky financials on their books - they both have plenty. And, you know ATMA is risky because Wilkerson is the chairman of ATMA’s board. Wilkerson has COMPLETE visibility into ATMA. I’m talking daily updates on loan losses/forbearance. If ATMA was a guaranteed success Wilkerson could have convinced Helios to take it. But, he didn’t, which means ATMA is a big question mark. I guarantee there are tons of bad debts piling up. And, the prognosis goes something like this... if energy demand, travel, and life in general return to normal in the next 6 to 12 months then ATMA will probably work out ok, but if it doesn’t then we’re probably impairing this sucker big time. Remember, ATMA was already a red flag when it asked to defer interest payments back in December - even before Covid emerged as a threat. No doubt FAH’s Wilkerson has plenty of IQ. A Harvard MBA and a masters from Yale is ample evidence. I have a hunch his experience with CIG and ATMA will propel him to world-class turnaround expert status. And, I’m sure he is experiencing a lifetime’s worth of stress these days. But, concentrating $500+ million into a falling knife bank holding company, a horrendously mismanaged infrastructure company, a startup education company, and a couple AGH spin offs was a terrible rookie mistake - fueled by impatience, lack of discipline, and unawareness of one’s circle of competence. (The blame can be shared by Wilkerson, FFH’s investment team, and FAH’s board.) The whole fiasco was a hope strategy that didn’t work out. From what I’ve gathered in a few hours of digging, Helios is much more in line with the type of investment manager you would expect of a partnership with a reputable billionaire like Prem. Being the largest, fastest growing, savviest Private Equity group in Africa comes with plenty of competitive advantages. (I’m intrigued by the little I’ve learned so far about their growth, telecom business, and dollar denominated credit operation.) My gut says Helios got wind that Prem was looking for a new investment manager for FAH. I suspect Helios has plenty of investment opportunities that could thrive with more access to dollar bills. I suspect Helios was aware of FAH’s large cash position, and skillfully and compellingly made Prem aware of what Helios could do with a couple hundred million of extra US dollars (remember, Africa does not have access to the Federal Reserve’s dollar swap lines. There has been a run on dollars, and African business is a fish out of water without dollars.) I suspect Helios said to Prem something along the lines of “if you not only give us control of FAH’s $140 million of cash & equivs, but also kick in an extra $40 mil while taking ATMA’s risk off the table, we already have the breadth of opportunities and knowledge (aka more ideas than capital) to immediately deploy US dollars so incredibly profitably that investing in Africa during its 40% off sale will feel even easier than investing in US equities in the 1970’s.” Prem says “where do I sign the check?” I do not know if you were on the call for AGM 2020 and heard Prem and Michael's comments when they were asked point blank if there is any stress in any of the businesses including ATMA or CIG...their response was basically that their internal tests indicated that businesses will be able to manage on their own apart from the 40mil to ATMA . Prem called the share price at 3$ an absolute joke . They basically cannot sell at ATMA for 40 mil to a related party without marketing the business independently to the market. UBN stake alone could have easily fetched 80-100mil .

It doesn't look like Helios is paying anything up front. In exchange for the 46% stake Helios is committing a percentage of all future fees from its private equity funds. I haven't found any info on Helios's historical fee earnings yet. Helios manages around $3.6 billion. For now I'm assuming the deal is structured where Helios will start out contributing maybe $15 to $25 million annually. I also assume they will continue increasing their assets under management, which should generate additional fee revenue going forward. Helios will benefit from having a liquid, publicly traded, investment vehicle backed by the credibility and network that comes with Fairfax. FAH will benefit from being managed by leading, proven, investors in Africa. what does not seem right is selling ATMA for 40mil to Fairfax when Fairfax africa themselves have calculated the tangible book value around 280 mil and were selling business in 4 countries to Equity group for 105mil + u have UBN and Botswana... If helios contribute 20mil in earnings and u put multiple of 10 to that ..it implies that FAH is valued at 400mil right now? I somehow doubt helios will contribute in excess of 10 mil right now but then there is no way to be sure until we see more data...they should have released these numbers alongwith press release I 100% agree there should have been more information. At the very least there should have been some historical information about Helios’s fees. I’m sure all the major shareholders, like Omers, are aware of this information. But, my first impression when reading the press release was “wow, this announcement shows zero regard/respect for minority equity holders.” My assumption is Prem would not appreciate being treated the way this announcement treated smaller shareholders if roles were reversed. My guess is he believes the smart money has already bailed. I also think this is a pretty good/brilliant solution to what everyone knows was a serious eff-up. And they probably expect the smart money to recognize the solution’s “brilliance.” At this point the worst case is along the lines of what SharperD has been warning about... that equity investors simply cannot outrun currency devaluation, corruption, and poor business performance in Africa. If so, this deal only prolongs the slow, painful, death. On the other hand, we could be looking at a scenario where a decade from now: - $450 million of existing assets doubles in value to $900 million - Helios contributes $400 million of fees, which is invested and grows to a total value of, say, 600 million - Helios increases their PE assets under management from $3.6 billion to, say, $10 to $12 billion, which will contribute $80 or $100 million of annual fee income to FAH. If you slap an 18 multiple on that and add it to the prior two items you get a fair value over $3 billion, and a 5 to 10 bagger from today’s price. I have a hunch the optimistic scenario is where Prem is leaning, and probably thinks no further explanation is needed. With that said, without more color on expected fees this is highly speculative. at 3$ per share the market cap is around 180mil out of which 140 is cash( minus 40 mil they lent to ATMA which Fairfax is now guaranteeing) . Even after this deal the fair value is probably around 5.50 assuming no new impact on investmetns from COVID-19 since Mar 31. What really bothers me is the sale of ATMA for 40mil when UBN stake alone is worth north of 100mil and UBN itself is on much firmer footing now than a couple of years ago. This is likely going to open up FAH mgmt to potential litigation if there is isn't more to the deal. As it is it seems like Fairfax Financial is trying to make up for its loss in FAH by getting ATMA for pennies. I suspect Helios needs/wants US dollars. And, I think ATMA was probably too risky for Helios. Helios already has a focus on financials, so they probably didn’t want any more in the portfolio. UBN is in Nigeria. Nigeria is extremely oil dependent. It costs $23 per barrel to extract oil in Nigeria. There’s much cheaper oil in nearby regions (aka Middle East). So, with reduced global demand Nigeria isn’t exporting as much, which means their US dollar supply is running low. They already had to devalue their currency once to slow the USD depletion. And, when they did it hit the value of UBN hard. Also, approx 30% of UBN loans are to the oil & gas industry. Additionally, ATMA’s other major bank is in Botswana, which is heavily dependent on the travel and leisure industry. Ouch. Another one of their banks is in a hyperinflation country. And, they’re still stuck holding the non-strategic banks, which aren’t profitable. So, there’s plenty of pain at ATMA. Between the loan losses, currency devaluation, and interest rate fluctuations, it’s next to impossible to forecast what will remain of ATMA post Covid. The issue is they were trying to sell stakes in 4 countries ex botswanaand Nigeria to equity group for 105mil until a month ago. Do you think the deal would have gone through if ATMA dropped that price to 40mil..i think it probably would have...who knows though...plus they have been emphatically stating in their Annual letters, AGM 2020 call regarding how undervalued ATMA is and what a brilliant turnaround is going on at UBN ..UBN issued dividend for the first time in years and kept it on post COVID too. Oil is essentially trading at a 30% discount to last year despite the volatility and is above the Nigeria break even price for extracting it ...that UBN stake is always going to be worth atleast 100mil under most circumstances ....plus they have 150 mil in cash ( and no debt ) which they can use to tide over any situation...they even gave ATMA an extra 40mil and stated on the AGM 2020 call that all their businessmen are well capitalized for COVID after they had run their internal stress tests...if they had sold for the entire ATMA stake for 100mil , it would still be wrong but you could justify it as a firesale to close this deal... 40mil is criminal and if there isn't more to the deal ...then Prem + rest of mgmt can give up the charade of being honest and ethical because they just royally screwed the minority shareholders. Moreover, OMERS proabably has access to financials of helios and other shareholders dont, so OMERS can make a more informed decision which is another -ve for minority shareholders

It doesn't look like Helios is paying anything up front. In exchange for the 46% stake Helios is committing a percentage of all future fees from its private equity funds. I haven't found any info on Helios's historical fee earnings yet. Helios manages around $3.6 billion. For now I'm assuming the deal is structured where Helios will start out contributing maybe $15 to $25 million annually. I also assume they will continue increasing their assets under management, which should generate additional fee revenue going forward. Helios will benefit from having a liquid, publicly traded, investment vehicle backed by the credibility and network that comes with Fairfax. FAH will benefit from being managed by leading, proven, investors in Africa. what does not seem right is selling ATMA for 40mil to Fairfax when Fairfax africa themselves have calculated the tangible book value around 280 mil and were selling business in 4 countries to Equity group for 105mil + u have UBN and Botswana... If helios contribute 20mil in earnings and u put multiple of 10 to that ..it implies that FAH is valued at 400mil right now? I somehow doubt helios will contribute in excess of 10 mil right now but then there is no way to be sure until we see more data...they should have released these numbers alongwith press release I 100% agree there should have been more information. At the very least there should have been some historical information about Helios’s fees. I’m sure all the major shareholders, like Omers, are aware of this information. But, my first impression when reading the press release was “wow, this announcement shows zero regard/respect for minority equity holders.” My assumption is Prem would not appreciate being treated the way this announcement treated smaller shareholders if roles were reversed. My guess is he believes the smart money has already bailed. I also think this is a pretty good/brilliant solution to what everyone knows was a serious eff-up. And they probably expect the smart money to recognize the solution’s “brilliance.” At this point the worst case is along the lines of what SharperD has been warning about... that equity investors simply cannot outrun currency devaluation, corruption, and poor business performance in Africa. If so, this deal only prolongs the slow, painful, death. On the other hand, we could be looking at a scenario where a decade from now: - $450 million of existing assets doubles in value to $900 million - Helios contributes $400 million of fees, which is invested and grows to a total value of, say, 600 million - Helios increases their PE assets under management from $3.6 billion to, say, $10 to $12 billion, which will contribute $80 or $100 million of annual fee income to FAH. If you slap an 18 multiple on that and add it to the prior two items you get a fair value over $3 billion, and a 5 to 10 bagger from today’s price. I have a hunch the optimistic scenario is where Prem is leaning, and probably thinks no further explanation is needed. With that said, without more color on expected fees this is highly speculative. at 3$ per share the market cap is around 180mil out of which 140 is cash( minus 40 mil they lent to ATMA which Fairfax is now guaranteeing) . Even after this deal the fair value is probably around 5.50 assuming no new impact on investmetns from COVID-19 since Mar 31. What really bothers me is the sale of ATMA for 40mil when UBN stake alone is worth north of 100mil and UBN itself is on much firmer footing now than a couple of years ago. This is likely going to open up FAH mgmt to potential litigation if there is isn't more to the deal. As it is it seems like Fairfax Financial is trying to make up for its loss in FAH by getting ATMA for pennies.