hobbit

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.

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

Can fairfax africa sell ATMA to fairfax as a related party transaction without independently marketing it? what is the valuation helios paid for 46% stake or FAH paid for helios in shares? no color on helios revenue either...Fairfax really struggles with IR

https://finance.yahoo.com/news/atlas-mara-limited-announces-proposed-062000984.html

on the call they said next 3 years

https://www.canadianinsider.com/node/7?ticker=FAH CEO bought 7K shares

FIH,FAH

Annual letter- mistakes with ATMA ( significantly less value in holdings in countries apart from Nigeria) , UBN might turn out decent. CIG - debt restructuring in place but do not be hopeful of turn around anytime soon. I would classify this as a mistake too. No significant changes anywhere else. My conclusion - extremely undervalued at these prices unless you put the value of their entire equity stake at zero which clearly does not seem to be the case. PT $8+

Link? annual letter just published " Fairfax India intends to complete an IPO of AIIHL, targeted to value 100% of BIAL at $3.0 billion (a targeted valuation of $1.3 billion for 100% of AIIHL). A ‘‘ratchet’’ mechanism has been agreed with the investor whereby if the IPO is completed at a valuation of AIIHL below $1.3 billion, the investor will receive incremental shares of AIIHL to compensate for the difference between that actual valuation and $1.3 billion. " https://s1.q4cdn.com/293822657/files/doc_financials/annual_reports/2019/Website-Fairfax-India-2019-Shareholders-Letter.pdf do not know what to make of the ratchet clause though, I have seen it in some VC deals before.

So BIAL IPO at 3bn . I wonder if coronavirus will have an impact on the timing or valuation. If it goes through as planned at 3Bn , that would be a significant win for the shareholders.

At $4.35 per share , common stocks worth 232 mil are being marked at zero and on top of that ATMA is trading at less than its stake in UBN which has been posting good results. can easily double from here

That might be true, but it is better to withhold an opinion until we understand who the buyer is and what sort of incentives may have come into play. I raised an eyebrow about this transaction because it seems strange that a 5% stake of a long-term asset would be sold. So, why did Fairfax sell it? Did they need to drop their stake to 49% to keep the nationalists at bay? Were they desperate for an infusion of $134m of cash? Did they find a partner with specific expertise that they wanted to bring aboard? Was there some other strategic motivation that was not articulated in the presser? One potential motivation that needs to be kept in the back of our head is that this minor transaction gives Fairfax the latitude to re-value that asset on its books. Fairfax India will book a gain of $500m based on a transaction of only $134m. And then what happens? Well, the Fairfax India's booked assets will suddenly be pumped up, which gives FFH a nice little boost to its annual management fee as well as the likelihood of a 20% performance fee in 2020. So, how much wealth will be extracted from Fairfax India unit holders from that little transaction? I'm guessing that the buyer's price for the 5% slice of that airport will be somewhat similar to the amount of money that FFH extracts from unit-holders. Maybe Prem will expand on this transaction in his annual letter and the annual report to provide more disclosure? For now, I am wary, but keeping an open mind. SJ https://www.vccircle.com/north-american-pension-fund-backs-fairfax-s-india-airport-investment-plan OMERS infrastrucure - strategic investor , this was probably done to get outside validation of big mark up in book value Okay, that makes me yet a little more uncomfortable. I had been holding out hope that it was a completely new player to the FFH world. FFH sold a chunk of the airport at roughly the same time as they sold a chunk of Riverstone runoff. I just hope to hell that there was no quid pro quo on those two deals and that the BIAL transaction was done at true fair market value rather than an inflated value designed to get a favourable mark on the value of the assets. There really should be no question about this, but unfortunately on more than one occasion, Prem has been too cute by half. SJ The quid pro quo being a sweet deal on Riverstone? Can’t see why that benefits FFH. Okay, so this is all hypothetical and nothing more. We have no knowledge that would support the existence of any quid pro quo between the two transactions. We have no actual knowledge of any wrong-doing or any other nefarious behaviour. But, the math is pretty basic and that's what creates the risk: The primary impact is that for every dollar that the value of that 5% BIAL deal is overestimated, the mark for Fairfax India goes up by $10. The secondary impact is that the annual management fee (1.5%) to FFH goes up by $0.15 based on the $10 mark and, possibly the performance bonus (20% of everything over the hurdle) could go up by $2 based on the $10 mark. So if you have the same buyer for two deals being conducted more or less simultaneously, and if you could convince the buyer to over-value one asset and under-value the other, you could create value for yourself. There's an argument that the buyer would only care about the combined value of the two cheques that he must write and wouldn't much care about the specific amounts on each cheque, so maybe it wouldn't be so hard to twist his arm. A portion of the $1 overvaluation would be attributable to minority Fairfax India holders, but that would be swamped by the secondary impact. So yes, I am a little uncomfortable with the idea of there being two transactions made to the same buyer at roughly the same time. If it true that the buyers are the same for both transactions, I wonder why there hasn't been better disclosure. And once again, to my knowledge, there is no evidence that anything like this has actually occurred. SJ Possible but I highly doubt an investment group like FFH will burn their reputation in such a manner. I believe, given the state of the investments, Fairfax India would have truly EARNED their fees in the long run.

That might be true, but it is better to withhold an opinion until we understand who the buyer is and what sort of incentives may have come into play. I raised an eyebrow about this transaction because it seems strange that a 5% stake of a long-term asset would be sold. So, why did Fairfax sell it? Did they need to drop their stake to 49% to keep the nationalists at bay? Were they desperate for an infusion of $134m of cash? Did they find a partner with specific expertise that they wanted to bring aboard? Was there some other strategic motivation that was not articulated in the presser? One potential motivation that needs to be kept in the back of our head is that this minor transaction gives Fairfax the latitude to re-value that asset on its books. Fairfax India will book a gain of $500m based on a transaction of only $134m. And then what happens? Well, the Fairfax India's booked assets will suddenly be pumped up, which gives FFH a nice little boost to its annual management fee as well as the likelihood of a 20% performance fee in 2020. So, how much wealth will be extracted from Fairfax India unit holders from that little transaction? I'm guessing that the buyer's price for the 5% slice of that airport will be somewhat similar to the amount of money that FFH extracts from unit-holders. Maybe Prem will expand on this transaction in his annual letter and the annual report to provide more disclosure? For now, I am wary, but keeping an open mind. SJ https://www.vccircle.com/north-american-pension-fund-backs-fairfax-s-india-airport-investment-plan OMERS infrastrucure - strategic investor , this was probably done to get outside validation of big mark up in book value I’m not a subscriber so can’t read the article. How well-sourced is it? Only asking because Fairfax deliberately aren’t disclosing the buyer and I can’t imagine why they wouldn’t if it was OMERS. VCcircle has been pretty reliable in my experience so I would say there is decent chance of OMERS being the investor. OMERS has made other bets in infrastructure space in India and also is a part of consortium that acquired London airport. It also bid for brussels airport.

That might be true, but it is better to withhold an opinion until we understand who the buyer is and what sort of incentives may have come into play. I raised an eyebrow about this transaction because it seems strange that a 5% stake of a long-term asset would be sold. So, why did Fairfax sell it? Did they need to drop their stake to 49% to keep the nationalists at bay? Were they desperate for an infusion of $134m of cash? Did they find a partner with specific expertise that they wanted to bring aboard? Was there some other strategic motivation that was not articulated in the presser? One potential motivation that needs to be kept in the back of our head is that this minor transaction gives Fairfax the latitude to re-value that asset on its books. Fairfax India will book a gain of $500m based on a transaction of only $134m. And then what happens? Well, the Fairfax India's booked assets will suddenly be pumped up, which gives FFH a nice little boost to its annual management fee as well as the likelihood of a 20% performance fee in 2020. So, how much wealth will be extracted from Fairfax India unit holders from that little transaction? I'm guessing that the buyer's price for the 5% slice of that airport will be somewhat similar to the amount of money that FFH extracts from unit-holders. Maybe Prem will expand on this transaction in his annual letter and the annual report to provide more disclosure? For now, I am wary, but keeping an open mind. SJ https://www.vccircle.com/north-american-pension-fund-backs-fairfax-s-india-airport-investment-plan OMERS infrastrucure - strategic investor , this was probably done to get outside validation of big mark up in book value

https://taarifa.rw/analysis-what-does-the-flopped-equity-bank-atlas-mara-deal-mean/

if you compare BIAL with other publiclty traded airports around the world , it still seems quite a bit undervalued even more so with a second terminal coming up soon.

If you go thrugh the annual reports , the original thesis for ATMA was to turn around bank's fortunes by getting a new CEO . In less than 1.5 years it changed to selling almost all the assets( excluding BancABC) at a price( ~100 million ) which is probably way below their intrinsic value. This makes me question the ability of FAH management to find good bets in Africa in general. FAH management has to be more open about this sudden change in strategy regarding their biggest position.

https://www.canadianinsider.com/node/7?ticker=FIH

Significant insider buying in the last 3-4 months

Harsha Raghavan leaving https://globenewswire.com/news-release/2018/05/21/1509329/0/en/Fairfax-India-Executive-Announcement.html

https://www.bloomberg.com/news/articles/2018-04-09/new-york-s-jfk-booted-out-of-world-s-top-20-busiest-airports wrt to india and bial...delhi is at 16 with 63 million passengers growing at 14% yoy... also below is a recent conversation where watsa discusses fairfax India..interesting insights into role of Deepak Parekh as well. https://www.youtube.com/watch?v=4XuBysRnGNc

http://forum.valuepickr.com/ https://www.screener.in/

thank you

http://archive.fortune.com/magazines/fortune/fortune_archive/1999/11/22/269071/index.htm