Fairfax India new issue

[hardcorevalue]

Might be a spicy annual meeting by the sounds of it! 

 

Airport compounding vs fees piling up.

 

I'll be there with some popcorn. 

[Txvestor]

15 hours ago, hardcorevalue said:

Might be a spicy annual meeting by the sounds of it! 

 

Airport compounding vs fees piling up.

 

I'll be there with some popcorn. 

As well it should. One of their main and initial  investments was a majority wipeout after 10yrs. Thats not insignificant. 10yrs is more than adequate to measure performance, and save for promises and small and partial exits we don't have meaningful progress. And yet they started at 30% and have taken performance fees peaking their ownership at 42% and have taken fees as cash as well. 
I think if they keep pushing the integrity narrative, this will be a huge black mark on their reputation . 

[bearprowler6]

14 hours ago, Txvestor said:

As well it should. One of their main and initial  investments was a majority wipeout after 10yrs. Thats not insignificant. 10yrs is more than adequate to measure performance, and save for promises and small and partial exits we don't have meaningful progress. And yet they started at 30% and have taken performance fees peaking their ownership at 42% and have taken fees as cash as well. 
I think if they keep pushing the integrity narrative, this will be a huge black mark on their reputation . 

Well said!!

[gfp]

Asheef on the mic asking about dividend capacity - Hari, why aren't you sending us cash bro??  Gobinath up next?

 

[gfp]

Ben giggles to himself.. "I don't think getting capital is going to be a problem for us"

 

Spoken like a true son of a billionaire

[gfp]

on Sanmar exit - it would have needed more capital, we didn't want to put in more capital, the controlling shareholder wanted to buy it, we thought we had other opportunities (not sure if this is past tense on purpose)

[vakilkp]

1 hour ago, gfp said:

Ben giggles to himself.. "I don't think getting capital is going to be a problem for us"

 

Spoken like a true son of a billionaire

 Thanks for the updates

[dartmonkey]

On 4/12/2026 at 3:32 PM, bearprowler6 said:

On 4/12/2026 at 1:00 AM, Txvestor said:

As well it should. One of their main and initial  investments was a majority wipeout after 10yrs. Thats not insignificant. 10yrs is more than adequate to measure performance, and save for promises and small and partial exits we don't have meaningful progress. And yet they started at 30% and have taken performance fees peaking their ownership at 42% and have taken fees as cash as well. 
I think if they keep pushing the integrity narrative, this will be a huge black mark on their reputation . 

Well said!!

I don’t think it’s well said at all. There’s nothing they have done with Fairfax India that in any way contradicts their claims to integrity, in my opinion. 

 

The share price has been a disappointment, but that’s not their fault. The incentive fees based on book value were clearly explained at the outset and have been followed - in fact , if anything, they have low-balled the book value on the assets that are not marked to market, reducing the fees.

 

I invested a higher percentage of my own assets in this investment than I should have, but I have only myself to blame for that.

 

I hope the share price catches up to fair value, and I expect the Anchorage IPO will do a lot of the work here. In a few days or a few years we will wake up to a share price of $40 and wonder what happened, and this talk of a ‘black mark on their reputation will look as silly as I think it is. 

[bearprowler6]

40 minutes ago, dartmonkey said:

I don’t think it’s well said at all. There’s nothing they have done with Fairfax India that in any way contradicts their claims to integrity, in my opinion. 

 

The share price has been a disappointment, but that’s not their fault. The incentive fees based on book value were clearly explained at the outset and have been followed - in fact , if anything, they have low-balled the book value on the assets that are not marked to market, reducing the fees.

 

I invested a higher percentage of my own assets in this investment than I should have, but I have only myself to blame for that.

 

I hope the share price catches up to fair value, and I expect the Anchorage IPO will do a lot of the work here. In a few days or a few years we will wake up to a share price of $40 and wonder what happened, and this talk of a ‘black mark on their reputation will look as silly as I think it is. 

If you like not making money for 10 years+ stick with this! From the beginning concerns were raised related to the performance fee. Bottom line zero performance (future promises and speculation is not performance) and lots of fees. I don't like to complain without offering a solution so here goes:

 

In my view, they should divest of all holdings in Fairfax India with the exception of the airport. Looking back, everyone only points to the airport as the reason to hold Fairfax India anyways. The proceeds from the sale of the various equity holdings should then be used to repay any debt and to initiate a buy back. If the shares are as undervalued as everyone says, then a buyback  is what management should be prioritizing and would now have the cash to do so. Having only the one holding in the company (the airport) would also suggest that a reduced performance fee structure would be justified (even more than it is now). The regulatory benefits to the various Fairfax insurance entities that hold the shares of Fairfax India, which are often cited here, would be preserved by leaving the public company structure in place. Management would then be able to focus all of its attention on getting the Anchorage IPO to market so that the true value (hopefully) of this asset would be realized. 

[dartmonkey]

28 minutes ago, bearprowler6 said:

I don't like to complain without offering a solution so here goes:

 

In my view, they should divest of all holdings in Fairfax India with the exception of the airport. Looking back, everyone only points to the airport as the reason to hold Fairfax India anyways. The proceeds from the sale of the various equity holdings should then be used to repay any debt and to initiate a buy back. If the shares are as undervalued as everyone says, then a buyback  is what management should be prioritizing and would now have the cash to do so. Having only the one holding in the company (the airport) would also suggest that a reduced performance fee structure would be justified (even more than it is now). The regulatory benefits to the various Fairfax insurance entities that hold the shares of Fairfax India, which are often cited here, would be preserved by leaving the public company structure in place. Management would then be able to focus all of its attention on getting the Anchorage IPO to market so that the true value (hopefully) of this asset would be realized. 

Makes a lot of sense. Or maybe just split the FIH stock into an Anchorage part and a 'rest of FIH' part, by sending out an Anchorage stock dividend to FIH shareholders. 

 

I doubt it's going to happen, but it might resolve a lot of the insatisfaction.

[CS]

 Did Sanmar trigger any fees? Since that has failed will the fees be refunded?

[Txvestor]

12 hours ago, gfp said:

on Sanmar exit - it would have needed more capital, we didn't want to put in more capital, the controlling shareholder wanted to buy it, we thought we had other opportunities (not sure if this is past tense on purpose)

They had other opportunities with that entire $17M they got. Thats an insane comment for something they not just invested in for 10yrs but also lent money to and added further capital. They got into a heavily cyclical commoditized business and the cycle has not turned. It was an error, pure and simple. 

[Madpawn]

5 hours ago, Txvestor said:

They had other opportunities with that entire $17M they got. Thats an insane comment for something they not just invested in for 10yrs but also lent money to and added further capital. They got into a heavily cyclical commoditized business and the cycle has not turned. It was an error, pure and simple. 

my thoughts exactly, I like how Prem is able to recognize and admit mistakes…hoping to see the same from Ben and team.

[gfp]

8 hours ago, Txvestor said:

They had other opportunities with that entire $17M they got. Thats an insane comment for something they not just invested in for 10yrs but also lent money to and added further capital. They got into a heavily cyclical commoditized business and the cycle has not turned. It was an error, pure and simple. 

 

I was just reporting what was said at the AGM.  It was $27 million USD equivalent.  Every million counts!

[dartmonkey]

On 4/15/2026 at 5:57 PM, CS said:

 Did Sanmar trigger any fees? Since that has failed will the fees be refunded?

The fees are based on the increase in book value per share over a 5% annual non-compounded hurdle, calculated at the end of each three-year period. The three 3 year periods so far ended at the end of 2017, 2020 and most recently 2023, with the next one at the end of 2026. At the end of 2023, book value was $21.85, and it was $22.94 at the end of 2025 (the most recent published report; Q1 2026 should come out in about 2 weeks.)

 

If the performance fee were to have been calculated for the end of 2025 instead of the end of 2026, my understanding is that it would be based on the 2023 high-water mark, i.e the $21.85 end of 2023 book value on which the previous performance fee was calculated, plus 2 more years of the 5% 'non-compounded' hurdle rate, which I think means just 5% of the original $10 issue price, or 2*$0.50. That would put the high-water mark at $22.85, meaning that there would be a tiny performance fee based on the difference between the highwater mark of $22.85 and the new book value of $22.94, and in fact, this amount is accrued in FIH's books, even if it is not yet paid out.

 

The Sanmar loss will of course be reflected in the updated book value. By the end of 2025, FIH carried their 37% stake of Sanmar shares at $101.6m, a $115.5m loss from its original value (along with $134.9m in realized gains from its Sanmar bonds.) The sale at $27m would mean they will have lost an additional ~$89m, or $0.66 per FIH share, which, all other things being equal, would push down their book by about $0.55 post tax, or from $22.94 to $22.39, meaning there would be no performance fee, based on the high-water mark of at $22.85.

 

Of course, all other things are not equal, and it is likely that by the end of 2026, book value will have increased again, for instance from a revaluing of the Anchorage stake. Meanwhile, the high-water mark will have increased by another $0.50, to $23.85, and we will see if book value has increased enough to trigger another performance fee. But in any case, the Sanmar loss will eventually be reflected in the performance fee, decreasing it by about 20% of the $0.55 per share loss, or $0.11 per share. So, yes, the Sanmar loss will in effect trigger a reduction in the performance fee from what it would have been without the loss, and it should be accrued to the books in the Q1 report, even if there is no immediate cash payment from FFH back to FIH.

[jbwent63]

Between the Sanmar write-off in Q1 of about $75 million ($102-$27) along with the mark-to-market losses on the public company portfolio of about $400 million, the total loss is $475 million or just over $3.50 per share. Before any write-ups of BIAL or other profits, the BV of the shares will drop to below $19.50 at the end of Q1, a long way from $23.35 with 9 months to go. Looking forward to the Q1 report and update.

[Hoodlum]

Fairfax will be increasing its stake in IIFL Capital.

 

https://www.ndtvprofit.com/markets/fairfax-in-talks-to-increase-stake-in-iifl-capital-via-preferential-allotment-sources-say-11387498

 

Fairfax Financial Holdings Ltd., a Canadian diversified financial holding company, is in discussions to acquire an additional stake in IIFL Capital Services Ltd. through a preferential allotment of equity shares, sources familiar with the matter told NDTV Profit on Tuesday. The proposed transaction could position Fairfax as a co‑promoter and majority shareholder in the Mumbai-based wealth management company. 

 

According to the sources, Fairfax is looking to purchase close to a 10% stake via the preferential issue, which could cost around Rs 1,000 crore. Such a transaction would trigger an open offer under the applicable takeover regulations.

 

As of March, promoters own around 30.9% stake in the company and Fairfax via FIH Mauritius Investments holds 27.2%. The total market capitalisation of IIFL Capital is Rs 10,200 crore.

 

The deal is said to be in its final stages and could be concluded within the next few weeks, subject to regulatory and shareholder approvals. The funds raised through the proposed allotment are expected to be used as growth capital for IIFL Capital's wealth management and asset management businesses.

[gfp]

As a stupid American I always have a hard time remembering how to figure crore.  This is approximately $108 million USA bucks?  Am I doing that right?

[dartmonkey]

Yes. At that valuation (328 Rs/share) it would mean we go from a 2720 crore INR stake ($291m) to a 3720 crore INR stake ($399m), putting it ahead of CSB bank as #3 investment, after the Bangalore investment ($2187m at year end) and IIFL Finance ($438m). Nice result so far, cost basis $51m in 2015. 

[This2ShallPass]

13 hours ago, dartmonkey said:

Yes. At that valuation (328 Rs/share) it would mean we go from a 2720 crore INR stake ($291m) to a 3720 crore INR stake ($399m), putting it ahead of CSB bank as #3 investment, after the Bangalore investment ($2187m at year end) and IIFL Finance ($438m). Nice result so far, cost basis $51m in 2015. 

Not a bad idea, wealth management industry will be growing faster in India.

[CS]

Looks like the annual meeting was a live event that can’t be replayed. Did they mention anything about Anchorage? Still on track for September? 

[Hoodlum]

13 minutes ago, CS said:

Looks like the annual meeting was a live event that can’t be replayed. Did they mention anything about Anchorage? Still on track for September? 

They didn’t commit to a timeline, just that they hope the approval will be soon.  The Quatr app has the recording and the transcript of the call that is searchable. 

[Txvestor]

BV down to $19.08 despite a $82.5M mark up in BIAL. Main drivers being the declining stock prices of IIFL Finance, IIFL Capital, CSB, Fairchem organics and 5paisa, as well as write down in Sanmar which they eventually exited after the Q ended. Additionally they has $156M in forex writedown with the 5+% Rupee devaluation. Will be interesting to see how the market reacts to this. I wouldn't be surprised to see a bit of a sell off. 

[BenT]

19 minutes ago, Txvestor said:

BV down to $19.08 despite a $82.5M mark up in BIAL. Main drivers being the declining stock prices of IIFL Finance, IIFL Capital, CSB, Fairchem organics and 5paisa, as well as write down in Sanmar which they eventually exited after the Q ended. Additionally they has $156M in forex writedown with the 5+% Rupee devaluation. Will be interesting to see how the market reacts to this. I wouldn't be surprised to see a bit of a sell off. 

Yeah, this is pretty bad. The timing has been terrible for this quarter-end, though. Indian stocks were at their worst at the end of March. The picture at the end of December was the opposite, which made this shift even more violent.

The rupee is doing poorly, as always.

What’s encouraging is that markups in BIAL seem to be becoming a quarterly habit.

[TwoCitiesCapital]

Seems like th discount to NAV has been closing via the NAV coming down. 

 

Surely we should all praise the management for closing the gap, no?