Fairfax India new issue

[glider3834]

3 minutes ago, Viking said:

@hobbit thanks for posting. Do you have any thoughts?

1.) is IDBI worth pursuing? 
2.) what would the approximate cost be?

- my assumption is FIH would need partners.

3.) how does FIH pay for it? Without current shareholders getting thrown under the bus?

- or could they fund it by contributing CSB and cash ($300 million or so?) and parters pony up the rest?

 

Is it possible for Fairfax India to do a capital raise? With shares trading at around $13 and BV at $19? 
Or do we see Fairfax India sell some more of the companies they currently hold?

—————

Do you have any thoughts on Anchorage? Will we see something happen on this front in 2023?

viking on Q1, media reports I have read suggest IDBI has been de-risked with profitability growing & other operating metrics improving . I am also wondering if Go Digit life is a consideration here, IDBI could offer bancassurance distribution opportunity.

 

 

 https://www.forbesindia.com/article/take-one-big-story-of-the-day/idbi-bank-divestment-strong-optics-and-no-hidden-surprises-lure-potential-buyers/83369/1

https://www.reuters.com/markets/asia/indias-idbi-bank-posts-record-high-q3-profit-lower-provisions-2023-01-23/

 

 

 

 

 

[hobbit]

4 hours ago, Viking said:

@hobbit thanks for posting. Do you have any thoughts?

1.) is IDBI worth pursuing? 
2.) what would the approximate cost be?

- my assumption is FIH would need partners.

3.) how does FIH pay for it? Without current shareholders getting thrown under the bus?

- or could they fund it by contributing CSB and cash ($300 million or so?) and parters pony up the rest?

 

Is it possible for Fairfax India to do a capital raise? With shares trading at around $13 and BV at $19? 
Or do we see Fairfax India sell some more of the companies they currently hold?

—————

Do you have any thoughts on Anchorage? Will we see something happen on this front in 2023?

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.

[Viking]

@hobbit and @glider3834 thanks for the info and links. Very helpful. Prem has talked a out investing billions in India in the coming years. We are seeing some smoke…

 

I also wonder when we see the price of Fairfax India get a little more realistic. It is such a head scratcher for me. 

[This2ShallPass]

I live in US and have a question with regards to buying stocks listed in Indian exchanges - is it better to buy these in taxable accounts? I'm planning to buy using IB, would taxes on cap gains / dividends be anyway deducted at source by India? 

[PJM]

1 hour ago, This2ShallPass said:

I live in US and have a question with regards to buying stocks listed in Indian exchanges - is it better to buy these in taxable accounts? I'm planning to buy using IB, would taxes on cap gains / dividends be anyway deducted at source by India? 

I don't know the tax implications for US residents but in India tax (capital gains and dividend) will be deducted at source. Also, as far as I know only Indian nationals or OCI holders are eligible to buy Indian stocks directly through IB or any other broker unless you go through FPI route which is complicated for individuals.

[gfp]

I was able to watch the Fairfax Financial annual meeting on the web but had to leave before the Fairfax India annual meeting.  In case there are others in my boat, here is the transcript of the Q&A from this year's Fairfax India annual meeting.

Fairfax India 2023 Annual Meeting.pdf

[Matthew Lembo]

much appreciated!

[Matthew Lembo]

if you have it, could you also share the  Fairfax Financial annual meeting transcript? 

[ICUMD]

I attended the Fairfax India meeting online.

Not a lot has changed from last year.  

 

Airport is doing very well and expanding at a brisk rate.  They reinterated how it remains undervalued in their opinion.  Bottleneck is lack of aircraft, not fliers.  It seemed that they are hoping Air India will make it their base.  Plan is for 90 million PPA by 2030.

 

They have 350M in cash awaiting new opportunities.

They refrained from commenting on IDBI since it's under discussion.

 

Large acquisitions would require partnerships for additional capital rather than stock sale due to depressed stock price.  Interestingly, they mentioned that if they were going for an outsized purchase, they could possibly partner with Fairfax, amongst others.

 

Some people inquired about the depressed stock price. They basically said that it's a value play at these levels. Some creative ideas in the audience about how to potentially incr stock price.

 

All other holdings are doing well except ncml.

 

 

Edited April 24, 2023 by ICUMD

[netcash1]

7 hours ago, gfp said:

I was able to watch the Fairfax Financial annual meeting on the web but had to leave before the Fairfax India annual meeting.  In case there are others in my boat, here is the transcript of the Q&A from this year's Fairfax India annual meeting.

Fairfax India 2023 Annual Meeting.pdf 200.92 kB · 20 downloads

thank you for attaching the Fairfax India AM transcript....Could you also provide us the Fairfax Holdings AM transcript?  thank you kindly

[gfp]

5 hours ago, netcash1 said:

thank you for attaching the Fairfax India AM transcript....Could you also provide us the Fairfax Holdings AM transcript?  thank you kindly

 

Hey, so I got the Fairfax India transcript off of TIKR, but they don't appear to have the transcript for the Fairfax Financial meeting - at least not yet.  Maybe another service will have it or someone else here will have it.  Good luck!

[Dipesh Patel]

FFH India AGM Slide Show

Fairfax-India-AGM-2023.pdf

[Parsad]

How India's Population Numbers Exploded to Overtake China:

 

https://www.cnn.com/2023/04/28/asia/india-population-overtakes-china-graphics-intl-hnk-dst-dg/index.html

 

Cheers!

[ICUMD]

Aviation in India

 

BBC News - Air India, IndiGo: New record as 456,000 Indians take flights in a day
https://www.bbc.co.uk/news/world-asia-india-65334390

[gfp]

Pretty surprised there was a $9.5 million block trade crossed this morning on FIH.U at exactly $13/share.  That is not a usual occurrence in this little guy.

[ICUMD]

Interesting. I wonder how such a trade happens on a thinly traded equity without causing share price to increase.  Maybe a pre arranged deal?

[gfp]

6 minutes ago, ICUMD said:

Interesting. I wonder how such a trade happens on a thinly traded equity without causing share price to increase.  Maybe a pre arranged deal?

Definitely over the phone and then just crossed on the exchange

[SafetyinNumbers]

Could be the buyback. It will be a month before we find out. 
 

They filed last months buyback today. Unfortunately no block trade like at the end of last month.

[netcash1]

Great data.  Where do we go on SEDAR to find this data?  It will be interesting if Fairfax India trade was a repurchase by India or HoldCo.?

 

[nwoodman]

Taiwanese electronics giant Foxconn has bought a huge tract of land on the outskirts of Indian tech hub Bengaluru, the key Apple supplier said in a filing Tuesday as it looks to diversify production away from China.

https://www.deccanherald.com/business/business-news/foxconn-buys-300-acre-site-in-indian-tech-hub-bengaluru-1217113.html 

 

I think this was rumoured a while back, but now confirmed.  
 

Edit:  Didn’t realise how close the airport it is

 

https://www.moneycontrol.com/news/business/foxconn-buys-300-acre-land-in-bangalore-rural-district-for-rs-300-crore-10553231.html

Edited May 9, 2023 by nwoodman

[glider3834]

https://www.fairfaxindia.ca/news/press-releases/press-release-details/2023/Fairfax-India-to-Acquire-Additional-Interest-in-Bangalore-International-Airport-Limited/default.aspx

[Crip1]

52 minutes ago, glider3834 said:

https://www.fairfaxindia.ca/news/press-releases/press-release-details/2023/Fairfax-India-to-Acquire-Additional-Interest-in-Bangalore-International-Airport-Limited/default.aspx

So, if 10% of BIAL is worth $225M, then the whole enchilada is worth $2.5B with FFHI's now 64% ownership valued at $1.6B. IF that is the case, then everything else is valued at $173M. 

 

What am I missing?

-Crip

[MMM20]

On 5/9/2023 at 8:23 PM, Crip1 said:

So, if 10% of BIAL is worth $225M, then the whole enchilada is worth $2.5B with FFHI's now 64% ownership valued at $1.6B. IF that is the case, then everything else is valued at $173M. 

 

What am I missing?

-Crip

That a majority stake in BIAL would likely trade at a significant premium to that valuation. Everything else is likely valued at a large negative number.

[gfp]

On 5/5/2023 at 9:56 AM, gfp said:

Pretty surprised there was a $9.5 million block trade crossed this morning on FIH.U at exactly $13/share.  That is not a usual occurrence in this little guy.

 

It was the company that bought this block!  

• Subsequent to March 31, 2023, the company purchased for cancellation 826,321 subordinate voting shares for a net cost of $10.7 million ($13.00 per subordinate voting share) under the terms of an automatic share purchase plan.

[ICUMD]

They are definitely following through with accreting value through share buybacks and buying another 10% BIAL.  Either they have got it wrong or the market is severely underpricing this thing.  

 

I'm guessing the latter.

 

A job well done by management.

Anchorage IPO will unlock value.