Fairfax India new issue

[LC]

6 hours ago, villainx said:

 

 

 

Presumably with Anchorage IPO and if FIH wins IDBI, this flips quite a bit to market prices swing book value, right?

 

 

 

I'm hoping so - really I'm just making a bet on the timing. As others have said, it's been a long time since a major liquidity event at FIH. I'm betting something happens in the next 2 years that gives the market an obvious clue to the underpricing here. 

 

But I keep the sizing small because in two years, I might be in the exact same place saying, "Ok what about the next two years!" I won't risk that type of opportunity cost on the majority of the portfolio.

[djokovic1]

1 hour ago, SafetyinNumbers said:

10% of shares outstanding a year is a crazy number to expect. It’s essentially a go private and as soon as the buying is done the discount will widen again and the buying wouldn’t have as much economic benefit. Better doing it slowly at bigger discounts. 

 

No it's not crazy to expect, you see it a lot with operating businesses who buy 10% a year, some more. On the whole yes it's rare but not hard to find. It's harder to find companies who do truly know when their stock price is well below intrinsic value, and get aggressive then.

 

As I said the problem here is structural, because the cashflow aren't there to solve the problem of lack of flows to re-rate the multiple. <5% capital returns are not going to change anything.

Separately, how can buying back shares not create economic value if you are trading at a material discount to intrinsic value. You are confusing price with value. As I said before, if a company is trading at 5x earnings and all the cash flow at 20% yield is used to buyback 20% of shares out, the intrinsic value of the company per share goes up by 20%. You get to own 20% more of the companies cashflows, standing still. That is value creation.

 

 

[SafetyinNumbers]

14 minutes ago, djokovic1 said:

 

No it's not crazy to expect, you see it a lot with operating businesses who buy 10% a year, some more. On the whole yes it's rare but not hard to find. It's harder to find companies who do truly know when their stock price is well below intrinsic value, and get aggressive then.

 

As I said the problem here is structural, because the cashflow aren't there to solve the problem of lack of flows to re-rate the multiple. <5% capital returns are not going to change anything.

Separately, how can buying back shares not create economic value if you are trading at a material discount to intrinsic value. You are confusing price with value. As I said before, if a company is trading at 5x earnings and all the cash flow at 20% yield is used to buyback 20% of shares out, the intrinsic value of the company per share goes up by 20%. You get to own 20% more of the companies cashflows, standing still. That is value creation.

 

 

They don’t want to take it private. That’s a big difference. With an operating business, it’s always an option and often preferred. It’s been happening a lot lately because the market structure has changed such that stocks that don’t screen for quality and not in benchmarks are targets for management teams. 

[SafetyinNumbers]

1 hour ago, villainx said:

 

you are saying FIH will own 3-7% of IDBI, putting in $400-$700 million USD depending on cash in addition to CSB bank stake, where other partners will put in $6.6 billion?

 

 

That makes sense to me but no idea what they will do. FFH would likely put up at least another billion itself. 

[Txvestor]

11 hours ago, hardcorevalue said:

 

In regards to your question, has this been asked at the AGM? 

 

Yes, and it seems to be their answer is along the lines of the stock price will approach IV in the end but knowing when is impossible to forecast. 

 

While I don't disagree, it's difficult watching fees continue to accrue.

 

Yes FFH are the biggest shareholders but they are being paid to wait while we are paying to wait. 

 

In that case it's fair to ask the question when? Cuz if 11yrs isn't long term IDK what counts as that. Noting that investing legend Peter Lynch's entire career at the helm of Magellan was 13yrs! 

if nothing happens in the coming 1-2yrs I think it would be farcical to speak of patience and IV and the gap will close.

It's why I have given myself a time line of end of 2026. Thus far from my purchase price, I am behind on both the S&P index and Fairfax mothership shares even with my approx 13% gains to date. I can't imagine the frustration of 11yr holders. 

And again the Fairfax Africa debacle counts as an example of why you can't get too trusting of the managements words here. 

 

•  

Edited December 15, 2025 by Txvestor

[ranimo]

8 hours ago, djokovic1 said:

 

No it's not crazy to expect, you see it a lot with operating businesses who buy 10% a year, some more. On the whole yes it's rare but not hard to find. It's harder to find companies who do truly know when their stock price is well below intrinsic value, and get aggressive then.

 

As I said the problem here is structural, because the cashflow aren't there to solve the problem of lack of flows to re-rate the multiple. <5% capital returns are not going to change anything.

Separately, how can buying back shares not create economic value if you are trading at a material discount to intrinsic value. You are confusing price with value. As I said before, if a company is trading at 5x earnings and all the cash flow at 20% yield is used to buyback 20% of shares out, the intrinsic value of the company per share goes up by 20%. You get to own 20% more of the companies cashflows, standing still. That is value creation.

 

 

Even better - the value goes up by 25%! 

[This2ShallPass]

18 hours ago, TwoCitiesCapital said:

With this logic, Zuck should have been fired from Meta in 2022 when they lost 80% of their MV and went back share prices of 2015.

"7-years with nothing to show for it?!?! In a bull market?!?! A trash CEO at best IMO!!! Could've made more money buying bonds!!! How is this guy a billionaire CEO?!?"

Not sure if using Zuck is a good example. He listened to the market and changed course, slashed whatever crazy metaverse spending he was planning on doing and share price recovered. All within 1-2 years. We are talking 11 years here and that's the issue. What exactly has management done to close the discount? 

 

My primary issue is with fees, not even fee structure. Fairfax could have easily done the right thing if they wanted. Taking 60% in fees on the actual profits realized by people paying those fees is exorbitant. And getting discounted shares on top. 

 

If an investment manager came to us and said he will get $20 for every $100 he makes for us that's ok. In 3 years, if he comes and says give me my $20, but we can only get $50 what will we do? If he says trust me and be patient you will get your remaining $30, my guess is most of us will tell him to take a hike. We will tell he can get his $20 when we get our $80. That to me would be "Fair and Friendly".

 

Fees aside, judging purely from investment performance FIH has done well. Here's my take

 

BIAL / IIFL companies - Home run

NSE - home run ($26M investment, sold for ~$175M. They were supposed to get 5% of NSE, but due to some last min issue could buy only 1%. If they had bought the 5% this would be a monster gain)

CSB - Good 

Sanmar - Bad

 

Then a bunch of smaller investments where they did good on average. 

 

As @SafetyinNumbers mentioned, they use crazy discount rates on their private holdings that make them look artificially low.

 

IPO or not, BIAL will continue to be marked up and my hope is that gest reflected in the share price in the following years.

 

 

[djokovic1]

16 hours ago, SafetyinNumbers said:

They don’t want to take it private. That’s a big difference. With an operating business, it’s always an option and often preferred. It’s been happening a lot lately because the market structure has changed such that stocks that don’t screen for quality and not in benchmarks are targets for management teams. 

 

Then in my view the reality is shareholders will likely have to live with a significant NAV discount until a catalyst occurs eg. Anchorage IPO. I would also find it painful that, management is unable to use a significant capital allocation tool i.e buybacks to create value when the opportunity is presenting itself. (And conversely find it joyful when Fairfax is able to do the same at the mothership).

Edited December 15, 2025 by djokovic1

[hardcorevalue]

6 minutes ago, djokovic1 said:

 

Then in my view the reality is shareholders will likely have to live with a significant NAV discount until a catalyst occurs eg. Anchorage IPO. I would also find it painful that, management is unable to use a significant capital allocation tool i.e buybacks to create value when the opportunity is presenting itself. (And conversely find it joyful when Fairfax is able to do the same at the mothership).

 

walk me through your thinking on why FIH won't trade at a discount to NAV after anchorage or why anchorage won't trade at a discount. 

I don't think it takes much analysis to know today's book is understated but why will the discount close?

[djokovic1]

Fair enough. It may still trade at a discount. You will get a likely get a onetime uplift in NAV?, which is more what I was alluding to. Realistically, to close the discount, they will need to start selling the stake post IPO and buyback FIH shares. 

[TwoCitiesCapital]

5 hours ago, This2ShallPass said:

Not sure if using Zuck is a good example. He listened to the market and changed course, slashed whatever crazy metaverse spending he was planning on doing and share price recovered. All within 1-2 years. We are talking 11 years here and that's the issue. What exactly has management done to close the discount? 

 

We're not talking about 11 years because it hasn't traded at a discount for that entire period. There was actually a period that it sold for a fairly high premium to its NAV early on. 

 

The discount started around 2019/2020 and the management has persistently repurchased shares while acquiring more and more of a trophy asset like BIAL. 

 

I see both as potential catalysts for closing the discount. 

 

Zuck is a perfect example if you were judging him from the bottom of the 18-month long drawdown. You're judging Fairfax on market returns, that don't reflect NAV, after a 20% drawdown on the market returns (but NOT on NAV)....it's quite similar circumstances and the relative performance with comparables quite a bit less stark than Meta's underperformance in 2022. 

 

5 hours ago, This2ShallPass said:

My primary issue is with fees, not even fee structure. Fairfax could have easily done the right thing if they wanted. Taking 60% in fees on the actual profits realized by people paying those fees is exorbitant. And getting discounted shares on top. 

 

The fees were known and disclosed. No other fund managers return fees or cut them for performance that doesn't meet your expectations. To expect Fairfax too is wild! 

 

5 hours ago, This2ShallPass said:

 

If an investment manager came to us and said he will get $20 for every $100 he makes for us that's ok. In 3 years, if he comes and says give me my $20, but we can only get $50 what will we do? If he says trust me and be patient you will get your remaining $30, my guess is most of us will tell him to take a hike. We will tell he can get his $20 when we get our $80. That to me would be "Fair and Friendly".

 

But that isn't what Fairfax said. Fairfax said "here's our fee - it's calculated on NAV" and "there's the potential shares don't trade at NAV". You agreed to both by buying the shares - it's not up to Fairfax to make you whole when that didn't work out in your favor. 

 

5 hours ago, This2ShallPass said:

Fees aside, judging purely from investment performance FIH has done well. Here's my take

 

BIAL / IIFL companies - Home run

NSE - home run ($26M investment, sold for ~$175M. They were supposed to get 5% of NSE, but due to some last min issue could buy only 1%. If they had bought the 5% this would be a monster gain)

CSB - Good 

Sanmar - Bad

 

Then a bunch of smaller investments where they did good on average. 

 

As @SafetyinNumbers mentioned, they use crazy discount rates on their private holdings that make them look artificially low.

 

IPO or not, BIAL will continue to be marked up and my hope is that gest reflected in the share price in the following years.

 

Which is exactly why they've earned the fees. It'a other investors willing to sell shares significantly below NAV that is a problem - Not Fairfax's management or fee structure. The moment people stop accepting $16 for their shares that are worth significantly more, the share price will go up. 

[CoGreenwich&Laight]

23 hours ago, SafetyinNumbers said:

Not only a CEF but also a CEF of private equity investment with a sponsor unlike all of its PE peers known for using very conservative valuations. It’s easy to see in the track record that the monetized and public equities have well outperformed the private names. Are they just bad at buying private names or are they conservative in their valuation assumptions? One look at the discount rates and terminal growth rates used and it’s pretty obvious. 

Or they didnt / cant sell their PE losers, therefore the lower performance. As of Dec 2017 they had $179MM in NCML and $333MM in Sanmar. At year end 2024, those are $201MM and $44MM. Seven years later. Those were material investments, ~20% of BV? Thats nuclear for IRR. Big positions, big losses, long time.

[CoGreenwich&Laight]

6 hours ago, This2ShallPass said:

Not sure if using Zuck is a good example. He listened to the market and changed course, slashed whatever crazy metaverse spending he was planning on doing and share price recovered. All within 1-2 years. We are talking 11 years here and that's the issue. What exactly has management done to close the discount? 

 

My primary issue is with fees, not even fee structure. Fairfax could have easily done the right thing if they wanted. Taking 60% in fees on the actual profits realized by people paying those fees is exorbitant. And getting discounted shares on top. 

 

If an investment manager came to us and said he will get $20 for every $100 he makes for us that's ok. In 3 years, if he comes and says give me my $20, but we can only get $50 what will we do? If he says trust me and be patient you will get your remaining $30, my guess is most of us will tell him to take a hike. We will tell he can get his $20 when we get our $80. That to me would be "Fair and Friendly".

 

Fees aside, judging purely from investment performance FIH has done well. Here's my take

 

BIAL / IIFL companies - Home run

NSE - home run ($26M investment, sold for ~$175M. They were supposed to get 5% of NSE, but due to some last min issue could buy only 1%. If they had bought the 5% this would be a monster gain)

CSB - Good 

Sanmar - Bad

 

Then a bunch of smaller investments where they did good on average. 

 

As @SafetyinNumbers mentioned, they use crazy discount rates on their private holdings that make them look artificially low.

 

IPO or not, BIAL will continue to be marked up and my hope is that gest reflected in the share price in the following years.

 

 

You can include NCML in your tally of material investments. So that makes it 2 Bad, 2 home runs, 1 Bad.  over 11 years....someone said Ocean of Opportunity earlier. Nah. Was there. Didnt happen here. Sorry. Sometimes its best to fold the cards. Divest non- airport investments, dividend to shareholders or SBB all dividends and divestments. Reduce the underperforming team. Focus on the airport(s) / share value. 

[gfp]

5 minutes ago, CoGreenwich&amp;Laight said:

Or they didnt / cant sell their PE losers, therefore the lower performance. As of Dec 2017 they had $179MM in NCML and $333MM in Sanmar. At year end 2024, those are $201MM and $44MM. Seven years later. Those were material investments, ~20% of BV? Thats nuclear for IRR. Big positions, big losses, long time.

 

Can you be more precise with these numbers please?  They are all jumbled up so I can't tell if you even have the correct numbers because they are out of order.

 

Yes, obviously NCML has been a losing investment.  For Sanmar it looks like you are mixing in bonds they used to own and comparing that to a current mark for equity only.  

[CoGreenwich&Laight]

2 minutes ago, gfp said:

 

Can you be more precise with these numbers please?  They are all jumbled up so I can't tell if you even have the correct numbers because they are out of order.

 

Yes, obviously NCML has been a losing investment.  For Sanmar it looks like you are mixing in bonds they used to own and comparing that to a current mark for equity only.  

yes, you are right. my bad. attached are the pics of value at year end 2017 and 2024. i dont know how much of those bonds converted into what equity value.

[CoGreenwich&Laight]

As a reminder, and this is material, in general PE funds take managment fees on committed capital, and performance fees on realized gains.  They do not take fees on the marked up value of their investments. Over a decade, that differential matters. I point this out due to some participants saying they are conservative on their marks. The thing is, i'd be THRILLED to pay the fees...if they'd earned it. They havent. PW said in the annual meeting that they invest in India to net out 15%+ to BV vs the 9% they have recorded. Over 11 years, thats an underperformance of close to half. It hasnt worked. Wont get there even if BIAL was at commonly perceived IV. Didnt earn the fees. Fold. Disband the team. Stop the panoply of fee leaks. SBB. Move all the chips to the winner, focus on airport+ (hosur, chennai, Bengaluru 2).

[hobbit]

If you rate Fairfax mgmt as ethical and shareholder friendly, then the only  thing that matters is the valuation of BIAL . If it trades at similar multipiles as GMR airports ( 30* EV/EBITDA ) which is the only listed pure airport play in India and assuming BIAL does on excess of 400M in EBITDA this year , it would value BIAL at 10B+ in enterprise value and assuming 1-1.2B in debt for BIAL the equity valuation for BIAL would be 8B+ which would imply a Nav per share of $50+ for FIH . This would put FIH at 1.4x the CAGR of s&p500 over the past decade. I think this is exactly why Ben ended up putting a slide comparing the valuation of BIAL to airports around the world adjusted for growth. It was a risky slide to include from legal perspective but if he included it anyways, it shows how confident they feel that BIAL will get a premium valuation in India.

 

Assuming no upside from any other investment from this point onwards, these returns would be better than 99.9% of fund managers out there justifying the fees FFH charges. Therefore, if you can underwrite the political and operational risk for BIAL and think of FFH as shareholder friendly, you will end up more than fine. 

Edited December 15, 2025 by hobbit

[CoGreenwich&Laight]

13 minutes ago, hobbit said:

If you rate Fairfax mgmt as ethical and shareholder friendly, then the only  thing that matters is the valuation of BIAL . If it trades at similar multipiles as GMR airports ( 30* EV/EBITDA ) which is the only listed pure airport play in India and assuming BIAL does on excess of 400M in EBITDA this year , it would value BIAL at 10B+ in enterprise value and assuming 1-1.2B in debt for BIAL the equity valuation for BIAL would be 8B+ which would imply a Nav per share of $50+ for FIH . This would put FIH at 1.4x the CAGR of s&p500 over the past decade. I think this is exactly why Ben ended up putting a slide comparing the valuation of BIAL to airports around the world adjusted for growth. It was a risky slide to include from legal perspective but if he included it anyways, it shows how confident they feel that BIAL will get a premium valuation in India.

 

Assuming no upside from any other investment from this point onwards, these returns would be better than 99.9% of fund managers out there justifying the fees FFH charges. Therefore, if you can underwrite the political and operational risk for BIAL and think of FFH as shareholder friendly, you will end up more than fine. 

I hope they get 30x, but i think thats a number for March 2025 year. Delhi is getting a 125%+ increase in their new rates on Dom pax for this year and onwards. Jeffries has ebitda growing 40% in FY March 2026. BIAL may get to 400mm but 2q was a very disappointing 0% dom pax growth offset by the ypp. Then this Indigo disruption should mess with 3Q. No, i dont think they are shareholder friendly at all. The opposite. If they were shareholder friendly, you would'nt have a lemming sycophant gatekeeper on the Annual Meeting as moderator keeping away the tough questions. The board is stacked with non-independents, and there are more members than at Apple. And ex-PW they would own some shares and get paid in them. The fee structure would be aligned with subordinates ie market price related. And they'd give us as much disclosure that GMR does with business color on a normal regular basis. And if that NAVps was anywhere near 50+ that you refer to, they should be gorging on the FIH shares not on another random walk.

And yes, BIAL is all that matters and I hope that remains the case. I was thrilled with the two 10% purchases. They need to focus just on that. Everything else is a wash to 'subordinate' plebian minorites, while the supervoting shares gorge at the pigtrough of fees while underperforming. 

[hobbit]

38 minutes ago, CoGreenwich&Laight said:

I hope they get 30x, but i think thats a number for March 2025 year. Delhi is getting a 125%+ increase in their new rates on Dom pax for this year and onwards. Jeffries has ebitda growing 40% in FY March 2026. BIAL may get to 400mm but 2q was a very disappointing 0% dom pax growth offset by the ypp. Then this Indigo disruption should mess with 3Q. No, i dont think they are shareholder friendly at all. The opposite. If they were shareholder friendly, you would'nt have a lemming sycophant gatekeeper on the Annual Meeting as moderator keeping away the tough questions. The board is stacked with non-independents, and there are more members than at Apple. And ex-PW they would own some shares and get paid in them. The fee structure would be aligned with subordinates ie market price related. And they'd give us as much disclosure that GMR does with business color on a normal regular basis. And if that NAVps was anywhere near 50+ that you refer to, they should be gorging on the FIH shares not on another random walk.

And yes, BIAL is all that matters and I hope that remains the case. I was thrilled with the two 10% purchases. They need to focus just on that. Everything else is a wash to 'subordinate' plebian minorites, while the supervoting shares gorge at the pigtrough of fees while underperforming. 

Lets say BIAL does 530M in revenue for 2025 CY and this revenue grows at a 20% annual growth rate for the next 5 years. In 2030 , BIAL will do north of 1B in revenue and more than 700M in EBITDA. Assume a conservative 20x multiple on 700M in EBITDA would make the enterprise value north of 14B, which discounted at a reasonable rate will still yield 7B+ in equity value as of today.

 

To put things in perspective, I think BIAL will likely do 1B+ just in aero revenue by 2033. I think people are vastly underestimating owing a top 3 monopoly asset growing at 30%+ in worlds 4th largest economy which itself is growing at 8% annually. The only risk here is geopolitical else BIAL alone will net investors a 20%CAGR since inception for their FIH shares. When Fairfax initially bought BIAL , India was a much more risky place to invest than it is today so kudos to them

 

Investment returns are always going to be a power law. For FIH , BIAL and IIFL group of companies will generate vast majority of the returns, as long as everything else combined even tracks the market, we will be fine. 

Edited December 15, 2025 by hobbit
correction

[SafetyinNumbers]

2 hours ago, CoGreenwich&amp;Laight said:

If they were shareholder friendly, you would'nt have a lemming sycophant gatekeeper on the Annual Meeting as moderator keeping away the tough questions

 
You can ask any question you want live. They take questions from non-analysts on the conference calls as well. They also do an investor trip to India annually. 

[UK]

13 hours ago, hobbit said:

I think this is exactly why Ben ended up putting a slide comparing the valuation of BIAL to airports around the world adjusted for growth.

 

Could you please direct me to the slides/slides you are referring here?

[UK]

7 hours ago, Haryana said:

Thanks!

[hardcorevalue]

Back well into the $16s again. 

 

If this gets back to $13 or $14, fees be damned, it would offer some solids IRRs absent an expropriation event.  

[villainx]

8 minutes ago, hardcorevalue said:

If this gets back to $13 or $14

 

That would boost the post count in this thread too.

[TwoCitiesCapital]

3 minutes ago, villainx said:

 

That would boost the post count in this thread too.