Fairfax India new issue

[villainx]

Fairfax India could use some positive catalyst.  Patience is okay, but there's opportunities that' there for a stronger Fairfax India.

 

 

[dartmonkey]

2 hours ago, SafetyinNumbers said:

It was contractual they take the first two performance fees in stock. If I recall correctly, the first performance fee it was trading above book value, the second one was a big discount but it was tiny (~500k shares) and they bought almost 6x the shares issued for the performance fee back cheaper earlier in the year. You got the last round correct. 

 

 

Yes: The first performance fee was paid based on results at the end of 2017, and they took shares as per the contract, which was "7.7million subordinate voting shares valued at $14.93 per share (the weighted average share trading price over the last ten trading days in 2017)".

 

The second performance fee was paid based on results at the end of 2020, also in shares as per the contract, but it was tiny: "a performance fee of $5.2 million was payable and settled with the issue of 546,263 subordinate voting shares of Fairfax India".

 

The third performance fee was paid based on results at the end of 2023, and as per the contract, Fairfax had the choice of receiving the fee in cash or in shares: "Fairfax Financial elected to receive the performance fee of $110.2 million in cash to minimize dilutive impact to Fairfax India shareholders, as the number of shares issued to settle the performance fee would have been based on Fairfax India’s share price which is currently trading at a discount to its book value."

 

And last year (not a 3-year milestone for the calculation of the performance fee), they summarized their performance fees thus far: 

 

"Under the investment advisory agreement, Fairfax Financial is entitled to a performance fee, calculated at the end of each three-year period, of 20% of any increase in Fairfax India’s BVPS (including distributions) above a noncompounded 5% increase each year from the BVPS at inception in 2015. For the first two three-year periods, Fairfax India was required to settle the performance fee with its subordinate voting shares, but at the end of the third three-year period, Fairfax Financial elected to receive its performance fee payable of $110.2 million in cash to limit shareholder dilution."

 

 

And as Safety points out, it doesn't make much difference whether Fairfax takes cash or shares for the fee - they are using far more cash to repurchase FIH shares anyways.

 

 

[Crip1]

59 minutes ago, villainx said:

Fairfax India could use some positive catalyst.  Patience is okay, but there's opportunities that' there for a stronger Fairfax India.

 

 

As a preface, FFH is my largest holding by far, and FIH is in the top 5. I've had both for years (decades as it relates to FFH). As well, my second-guessing Prem and the rest of the management team is akin to my second-guessing Michael Jordan in his hey day. 

 

That said, the shareholders of FIH have not been rewarded for their faith in management, and their patience with management...pure and simple. One clearly understands the voting machine vs weighing machine aspect, but long term the "weight" has not been measurable. If management points to the value being well in excess of the price, so be it, but part of their responsibility as stewards of shareholder capital is to recognize the value in terms of price. FFH was undervalued for a while, and still is to an extent, but they are clearly closing that gap (and growing the value at the same time). With FIH, it's not the case,

 

In terms of answers, I don't have any. I am not close enough to be able to understand all of the parameters involved with the decision making process there, and it's not my job. As a shareholder, I provide capital. As management, they maximize it. 

 

-Crip

[cwericb]

35 minutes ago, Crip1 said:

As a preface, FFH is my largest holding by far, and FIH is in the top 5. I've had both for years (decades as it relates to FFH). As well, my second-guessing Prem and the rest of the management team is akin to my second-guessing Michael Jordan in his hey day. 

 

That said, the shareholders of FIH have not been rewarded for their faith in management, and their patience with management...pure and simple. One clearly understands the voting machine vs weighing machine aspect, but long term the "weight" has not been measurable. If management points to the value being well in excess of the price, so be it, but part of their responsibility as stewards of shareholder capital is to recognize the value in terms of price. FFH was undervalued for a while, and still is to an extent, but they are clearly closing that gap (and growing the value at the same time). With FIH, it's not the case,

 

In terms of answers, I don't have any. I am not close enough to be able to understand all of the parameters involved with the decision making process there, and it's not my job. As a shareholder, I provide capital. As management, they maximize it. 

 

-Crip

 

I am in exactly the same boat. Owned Fairfax for nearly 20 yearsand it is by far my biggest holding and am a happy share holder. However I have held FIH since it's inception and while the company seems to be doing quite well, share price is less today than it was eight years ago.

 

There comes a time when, if a business is doing well, shareholders expect to be rewarded. And in this case, it seems to be far past time and patience is wearing thin. 

Edited December 12, 2025 by cwericb

[73 Reds]

43 minutes ago, Crip1 said:

As a preface, FFH is my largest holding by far, and FIH is in the top 5. I've had both for years (decades as it relates to FFH). As well, my second-guessing Prem and the rest of the management team is akin to my second-guessing Michael Jordan in his hey day. 

 

That said, the shareholders of FIH have not been rewarded for their faith in management, and their patience with management...pure and simple. One clearly understands the voting machine vs weighing machine aspect, but long term the "weight" has not been measurable. If management points to the value being well in excess of the price, so be it, but part of their responsibility as stewards of shareholder capital is to recognize the value in terms of price. FFH was undervalued for a while, and still is to an extent, but they are clearly closing that gap (and growing the value at the same time). With FIH, it's not the case,

 

In terms of answers, I don't have any. I am not close enough to be able to understand all of the parameters involved with the decision making process there, and it's not my job. As a shareholder, I provide capital. As management, they maximize it. 

 

-Crip

Not directed at you, but there seems to be a lot of belly-aching about this stock.  Why?  All "value investments" trade at a specific price for a reason.  Value investments typically need some form of catalyst, i.e., a change in leadership, an inflection point, or an event that changes the trajectory.  Fairfax India has such an event coming up - the Anchorage IPO.  Doesn't really matter when it happens as long as it does.  In the mean time, now would be a perfect time to accumulate shares rather than lament the company's history.  What am I missing?

[villainx]

12 minutes ago, 73 Reds said:

belly-aching about this stock. 

 

I'm only belly aching to the extent that a depress share price (relative book, relative intrinsic) may hinder the pursuit of opportunities.  May.

 

Don't think it'll stop since FIH and Fairfax are a resourceful, creative bunch, but it's not optimal.

 

 

[Viking]

On 11/24/2025 at 3:19 PM, Viking said:

Time to get reacquainted with Fairfax India. Why? The shares are trading at $16.00. BVPS is $20.72. So shares are trading at a discount to BV of $4.72/share, or 23%. Is 23% enough of a discount to get excited about? No, it's not. 

 

OK, so why am I so interested in Fairfax India at $16.00/share? I think book value of Fairfax India is materially understated. As a result, the discount the stock is currently trading at is far in excess of 23% to its economic/intrinsic value. I also think Fairfax India is exceptionally well managed. 

 

What is the problem at Fairfax India? 

 

One investment the company initiated in 2016 (it closed in 2017) - the purchase of part of Bangalore International Airport Limited (BIAL), the third largest airport in India. It performed spectacularly well for Fairfax India the first 3 years (in terms of growth in BV). But since 2019, its performance has been terrible - literally a dog with fleas. To make matters worse, management at Fairfax India has been aggressively buying much more of it over the years. Today it has an economic ownership stake in BIAL of 74%. What a bunch of dummies! BIAL now represents 53% of Fairfax India's total investments. 

 

How can management at Fairfax India be both 'exceptional' and 'dumb'?

 

Of course, they can't be both. So, let's try and figure out which it is. 

 

What is the problem at BIAL?

 

The 'value' of the company has not really changed in 6 years. At December 31 2019, 100% of BIAL was valued at $2.65 billion (using Fairfax's FV). At September 30 2025, 100% of BIAL was valued at $2.67 billion. 

 

How is this impacting Fairfax India?

 

BIAL is Fairfax India's largest holdings. Over the past 6 years, BIAL increased from 23% of total investments to 53% today. BIAL is such a large holding, its 'poor performance' has submarined Fairfax India's performance.   

 

As a result, common shareholders' equity at Fairfax India has changed only modestly over the past 6 years. At December 31 2019, it  was $2.58 billion. At September 30 2025 it was $2.83 billion. 

 

But here is where the Fairfax India story gets interesting. 

 

Do you really think the value of BIAL is the same today as it was 6 years ago?

 

Of course, those of us who have followed BIAL over the past 6 years KNOW it's worth much more today than it was worth at the end of 2019.
 

And guess what… the management team at Fairfax India knows it too. That is why they have been buying all of BIAL they can get their mitts on. To answer the question we posed earlier, the management team at Fairfax India is smart like a fox (they are NOT dumb).

 

BIAL is exceptionally well managed (and has been since Hari Marar was installed as Managing Director and CEO in July 2017, after Fairfax India got a control position in BIAL). It is a completely different airport today than it was 6 years ago. It added a second runway which began operating December 2019. And a second terminal, which doubled capacity from 25 million to 51.5 million passengers, which began operating early 2023. An expansion plan for T2 will increase capacity further to 80 million passengers by the end of the decade. Passenger growth at BIAL is taking flight - with a long runway still ahead of it. The plans to develop the property adjacent to the airport are also progressing nicely (an initiative called 'Airport City') - creating a third earnings stream for BIAL with strong growth prospects over the next decade.   

 

How much is BIAL worth? 

 

Fairfax India is planning to IPO part of BIAL to the public in India (as part of Anchorage). When this happens, we will get an updated market value for BIAL. My guess is it will be significantly more than Fairfax India's current fair value. And given the size of BIAL within Fairfax India, this has the potential to significantly increase the BV of Fairfax India. Which should increase the share price of Fairfax India.  

 

When will the IPO of Anchorage/BIAL happen?

 

That is the rub. We don't know. But given the economic/intrinsic value of BIAL is growing nicely every year, a delay in the IPO is actually a good thing for a long term investor. 

 

Of course, there is much more to the Fairfax India story. And the BIAL story. So please do your own due diligence before making an investment decision. 

 

For a more in-depth review of Fairfax India:

• James Emanuel: https://youtu.be/Ksctkf4Frkw?si=D-xfhumWl8wlcesX

 

 

Fairfax India has become a play on BIAL. I outlined the reasons in my previous post. When the Anchorage IPO happens, shareholders will get paid - and probably very well (especially from where the stock is trading today). The question is timing and this requires patience. (Importantly, the airport is increasing in value every year - you are getting paid handsomely while you wait.) What not to like about the current set up?

Edited December 12, 2025 by Viking

[djokovic1]

3 hours ago, SafetyinNumbers said:

I was referring to liquidity at the holdco level to make more investments etc…

 

But if intrinsic value in your estimate is 45, and the stock is ~1/3rd of that, shouldn't all investment go towards buybacks before anything else?

[gfp]

Someone just cleared a 150k share block while y'all are bellyaching 

[CoGreenwich&Laight]

7 hours ago, This2ShallPass said:

I didn't factor in the interest payments! $877M in total fee / interest and let's see total value generated for the shareholder in 10 years, 974M. They have charged themselves 60% of what could be realized by the minority! Btw, this is ignoring the double whammy - they charged using BV and paid themselves in heavily discounted shares until the last round. 
 

 

5 hours ago, SafetyinNumbers said:

It was contractual they take the first two performance fees in stock. If I recall correctly, the first performance fee it was trading above book value, the second one was a big discount but it was tiny (~500k shares) and they bought almost 6x the shares issued for the performance fee back cheaper earlier in the year. You got the last round correct. 

Its actually worse, those fees are in historical dollars. the share price appreciation is in current $. Yes, the first two were contractual but as a controlling shareholder with supermajority shares (unfortunately) you can autopen if you want to do the right thing. They still have that clause there. Why not signal more shareholder friendliness after almost 11 years. Below is the fees / charges, and their performance relative to two ishares India etfs. Their share performance lags ETFs. Do the fees justify the performance failure? With this history do you think the market will self correct and price this anywhere near book value given the fee structure, much lower liquidity, and rare communications with any indepth details? i urge you to consider the charts and use your voice with management. Im long plenty of shares because of the airport and air pax fundamentals in India, which will only fully be valued if mgmt changes this structure. 11 years is not cherry picking any data. FIH can be valued at the figures quoted above for intrinsic value only one way...aggressive buyback, desist from non airport investments, change structure to carve out the airport so that people who want to invest in other stuff can.

[SafetyinNumbers]

36 minutes ago, djokovic1 said:

 

But if intrinsic value in your estimate is 45, and the stock is ~1/3rd of that, shouldn't all investment go towards buybacks before anything else?

They are also trying to run a business which means growing and strengthening their network. That means being able to do deals when they are available and keeping their investment professionals engaged. There is a balance. When the stock got hit in April, they did buy back stock. 

[SafetyinNumbers]

43 minutes ago, gfp said:

Someone just cleared a 150k share block while y'all are bellyaching 

Volume has been big the last 3 days 

[SafetyinNumbers]

7 minutes ago, CoGreenwich&Laight said:

FIH can be valued at the figures quoted above for intrinsic value only one way...aggressive buyback

Not sure aggressive buybacks actually close discounts. Elf.to bought back half the float, paid special dividends, raised its regular dividend 30x and split the stock 100 for 1 and is still a 30% discount to book. It’s the lack of passive demand that keeps the shares at a discount and that’s not changing. 

[CoGreenwich&Laight]

58 minutes ago, Viking said:

Fairfax India has become a play on BIAL. I outlined the reasons in my previous post. When the Anchorage IPO happens, shareholders will get paid - and probably very well (especially from where the stock is trading today). The question is timing and this requires patience. (Importantly, the airport is increasing in value every year.) 

i agree with your comments. it is a play on BIAL, and thats unlikely to change given how outsized it is as a % of intrinsic value, 75%, more? For eg, if they were to buy say their last deal, Jaynix for $33mm, thats a detraction from shareholders...

[CoGreenwich&Laight]

20 hours ago, SafetyinNumbers said:

I think intrinsic value is between $35-45. I think returns are pretty reasonable from a starting point of $9.50, after the IPO fees. They could be more aggressive with their marks and holders could have paid more fees up to the parent. The move from a premium to book to a discount to book has a lot to do with change in market structure. Management has taken advantage of it by buying back stock and I’m sure they will again when they have more liquidity. It’s not clear IDBI will take a big cash investment from FIH. They may contribute CSB at a premium and be the GP earning fees from LPs that are brought into the deal. 

they havent purchased any Real shares in almost 2 years. 0.6MM shares for 8.4mm in 2024, and thru June 2025, 341K shares for 5.2MM. Bogus. But of course their fees will drop...as this reduces BV.

[gfp]

Can we crescendo this bearishness for Tuesday next week please?  I'm waiting on a check

[73 Reds]

13 minutes ago, gfp said:

Can we crescendo this bearishness for Tuesday next week please?  I'm waiting on a check

+1  Until the IPO is announced the lower the price the better.  I thought this was a "value investing" board.

[Cod Liver Oil]

I own some of this. It is very cheap but has been meh like most downstream "value" entities. I remain willfully deluded with my ultra cheap Bollore, Odet and Exor.  Most of the time, the upstream entities do better: BN, UMG, Tencent, FFH etc... There are only about 7 incels in the world interested in this stuff. Buy the principal entity even if it doesn't scream as cheap. 

Edited December 13, 2025 by Cod Liver Oil

[SafetyinNumbers]

10 minutes ago, Cod Liver Oil said:

I own some of this. It has been meh like most downstream "value" entities. I remain willfully deluded with my ultra cheap Bollore, Odet and Exor.  Most of the time, the upstream entities do better: BN, UMG, Tencent, FFH etc... There are only about 7 guys in the world who incel this stuff. Buy the principal entity even if it doesn't scream as cheap.

It’s a market structure issue. If not in the benchmark or not screening well, there are too many other options for active investors who have very high return expectations. Most of the recent interest in the stock is from event driven investors waiting for the airport IPO. It will be interesting to see if the discount to BV grows when it happens. 

[SafetyinNumbers]

47 minutes ago, CoGreenwich&Laight said:

they havent purchased any Real shares in almost 2 years. 0.6MM shares for 8.4mm in 2024, and thru June 2025, 341K shares for 5.2MM. Bogus. But of course their fees will drop...as this reduces BV.

If they wanted to juice fees they could just mark stuff at fair value or higher like most PE vehicles.

[SafetyinNumbers]

54 minutes ago, CoGreenwich&Laight said:

i agree with your comments. it is a play on BIAL, and thats unlikely to change given how outsized it is as a % of intrinsic value, 75%, more? For eg, if they were to buy say their last deal, Jaynix for $33mm, thats a detraction from shareholders...

For long term investors it’s not a distraction and helps grow the network which for an entity that expects to be around forever is valuable.

[Munger_Disciple]

49 minutes ago, Cod Liver Oil said:

Buy the principal entity even if it doesn't scream as cheap.

 

I agree with this. To state the obvious, own the GP not the LP (duh!)

Edited December 12, 2025 by Munger_Disciple

[Madpawn]

This might’ve been discussed in the past, but in the event where Fairfax wins the bid for IDBI, do we expect FIH to participate? 
 

If not and instead FFH does it alone, does it destroy the long-term thesis of having FIH as a standalone entity? 

[TwoCitiesCapital]

2 hours ago, SafetyinNumbers said:

They are also trying to run a business which means growing and strengthening their network. That means being able to do deals when they are available and keeping their investment professionals engaged. There is a balance. When the stock got hit in April, they did buy back stock. 

 

Not just growing network, but also keeping long term performance and return potential in focus and not just focusing on daily returns. 

 

Having liquidity available to buy other infrastructure investments that will do well for the next 10-years might be superior to doing the thing that maximizes returns over the next 12-months. 

[TwoCitiesCapital]

Honestly feels like the set-up for Fairfax in 2021 to me. Everything was going up except Fairfax. Plenty of investors threw in the towel after sitting  in it for years with no to show and the rest of the market going up around them.

 

My posts on it being obvious steal at prices of $300-400/share largely went unengaged. The few people who were talking about it at that time were largely complaining about equity hedges, investment returns, rates being at 0%, and the shitty quality of investments in the portfolio - it wasn't until a few years later people jumped on board when the price was significantly higher. 

 

Nobody wants to own this today. Everyone is bitching about hypothetical performance that undervalues BIAL,uses that hypothetical performance to justify 'underperformance' relative to ETFs or some other benchmarks, all to clamor that Fairfax should return fees it was contractually owed because they want to feel better about a flat share price when that is always a risk in a closed fund structure... 

 

The value is obvious. There are catalyst potentially on the horizon. The management remains focused not just on BIAL, but other long term opportunities, and nobody wants to own it. Seems like I should be buying a hell of a lot more.