Fairfax India new issue

[dartmonkey]

54 minutes ago, TwoCitiesCapital said:

In Q4 of 2023 this was $12-13/USD and then 12-15 months later it was $20. People seem to forget that pop - perhaps because it didn't prove entirely sustainable. 

 

But the precedent is there, and I can see a 75-100% gain from here over the next ~15-18 months on a successful IPO of Anchorage. 

I think the logic of holding this investment is not that another 75-100% might happen, just because it happened before. It is that 74% of BIAL might be worth about $5-10b, meaning Fairfax's 74% might be worth $22-$44/share including the after tax Anchorage gain. Assuming the other holdings are worth about $15, say $10 with the current discount applied, a successful Anchorage IPO might take FIH shares to $32-$54, a gain of 78%-200%.

 

I should probably lighten up this holding which is way too big, with small gains, but I am terrified that the week after I do that, I will be looking at how many million % annualized I lost by selling half just before it goes from $18 to $45.

[SafetyinNumbers]

2 hours ago, dartmonkey said:

Yes, it's been a very long wait, but we may wake up one of these days to see that our shares have gone from $18 to $45, when the IPO gets priced, or maybe just when the IPO happens. Even that would only take this 11-year investment from being bad to being about average (I get 15% annualized if it went to $45 tomorrow), but it sure would make a big difference to my returns this year! 

Return expectations feel high to me if 15% is average. Versus other Indian equity exposure available its done about average.

[dartmonkey]

7 minutes ago, SafetyinNumbers said:

Return expectations feel high to me if 15% is average. Versus other Indian equity exposure available its done about average.

Your are right, 15% is just average for me in the last 5 years or so because I have had half my investments in Fairfax, so I am spoiled. I don't really expect to get more than that in the long run.

 

The 6% annualized from FIH has been a drag on my returns, and although is the average disappointing return from Indian shares, I really expected to do better, 11 years ago in 2015, especially given the unexpected bonus of having Modi continuously in power since then (beginning in 2014; now 2 more years in his 3rd 4-year term). Even better, considering that the book value return is much better than the FIH share price return, on paper, and that can't diverge forever.

[Crip1]

2 hours ago, dartmonkey said:

I should probably lighten up this holding which is way too big, with small gains, but I am terrified that the week after I do that, I will be looking at how many million % annualized I lost by selling half just before it goes from $18 to $45.

 

You ain't alone. It's less about waiting for a pop in price and more about that BIAL alone is worth a helluva lot more than it's selling for. At some point price will catch up with value. Part of me is pretty happy if management can continually grow value, but part of me is frustrated that value has not yet been monetized.

 

-Crip

[CS]

Assuming the mentioned real value arrives, what do you guys plan to do with FIH? Keep holding or sell out? 

[Txvestor]

34 minutes ago, CS said:

Assuming the mentioned real value arrives, what do you guys plan to do with FIH? Keep holding or sell out? 

I think 11 years in with meagre returns. The overall sentiment would be to sell. However, I do plan to hold because if you look at the projected passenger numbers for BIAL through the next five years, it's pretty impressive. And I happen to believe that the projected increase in air traffic will arrive. 
Otherwise the main assets remaining are IIFL CSB and Seven islands Shipping. All of which seem to be growing nicely. So unless I have a better capital allocation opportunity why sell and incur capital gains. 

Edited 16 hours ago by Txvestor

[73 Reds]

7 hours ago, CS said:

Assuming the mentioned real value arrives, what do you guys plan to do with FIH? Keep holding or sell out? 

I'll probably continue to own it since it is my only direct India exposure and there is a lot of untapped potential there.

Edited 9 hours ago by 73 Reds
word

[SafetyinNumbers]

8 hours ago, CS said:

Assuming the mentioned real value arrives, what do you guys plan to do with FIH? Keep holding or sell out? 

I own a core position and will probably trade around it. I expect when announced we’ll trade at a small premium to book value and then once the IPO happens at a bigger discount to BV then we are now. I agree it’s probably a mistake to sell any depending on return expectations. The airport could be a 10x in 10 years. 

[TwoCitiesCapital]

9 hours ago, CS said:

Assuming the mentioned real value arrives, what do you guys plan to do with FIH? Keep holding or sell out? 

 

I expect to lighten it up so some once it approaches a fairer value. 

 

I'll have to re-evaluate my expectations for future growths against the fees at that time, but will probably continue holding a small piece going forward. 

 

Concentration is how you make money and diversification is how you keep it - so will make some sense to me to trim after I get to a decent annualized return on the position and it's not trading obviously cheap. 

[CoGreenwich&Laight]

On 5/29/2026 at 4:45 PM, TwoCitiesCapital said:

 

 

I think what I take from this all is that 14x is still cheap relative to comparables - and this is growing much faster than comparables. 

 

I don't know if they'll hit $500M in two years time and I don't know if Fairfax India's investment in BIAL alone is worth $50/share. 

 

But I'm quite certain that $18 is the wrong price and not even in the right ballpark given comparables - and I think BIAL is probably better than those comparables given the land/city surrounding it, the development opportunity/optionality there, as well as organic growth at the airport/population itself. 

 

Buying a high growth opportunity with a ton of optionality at a low growth multiple (and then a discount to that NAV!) seems setting to be setting up for a homerun even if actual business results are mediocre. And I don't expect them to be mediocre. 

 

On 5/29/2026 at 3:51 PM, SafetyinNumbers said:

We’ll check back in two years!

 

My model which deferred the cy 26 pax growth into the future due to oil/flight frequencies has ebitda of 481 in cy '27. Pre reducing pax growth in CY 26, i think i had 500mm. Some further deterioration due to INR/USD can be assumed...perhaps 3%. CY '24 / FY '25 may have 32mm USD of real estate sales (perhaps not ebitda) which i picked up from debt related doc's. But none of this is very clear.  And due to macro, i dont think the IPO is happening this year. It will be deferred. So the question does remain...where will they get the $415MM they need to complete the IIFL Capital transactions...and why not do a dutch tender at $20 for FIH stock if its worth in the 30's to 50s...i just dont get it...yes, it will reduce their fees from book value but thats so dumb. They dont have any currency right now which couldve been the case if FIH traded at 'fair' value...and therein lies the reason for the discount, beholden to their decisions without any recourse, and worse any disclosure...other reasons fail. Anyone know the source of the $415mm for IIFL...? anyone getting responses from the company on this?

 

[CoGreenwich&Laight]

On 5/29/2026 at 1:31 PM, Txvestor said:

Forex rate will impact this. And it's unclear to me how much of this are one time gains from the airport city real estate gains. They cite 13.8x cash flow multiple on a 3B valuation. That's a $217M number. So yeah, I do think 500M is aggressive. 

If I recall correctly The multiple is on “normalized cf” whatever the f that means 

[SafetyinNumbers]

30 minutes ago, CoGreenwich&Laight said:

And due to macro, i dont think the IPO is happening this year. It will be deferred.

You think they will choose to defer after trying to get it done for 5 years?

 

31 minutes ago, CoGreenwich&Laight said:

why not do a dutch tender at $20 for FIH stock if its worth in the 30's to 50s.

I assume it’s because they want to make other investments like IIFL Capital. We have discussed this previously. 

[TwoCitiesCapital]

Exor has been repurchasing shares opportunistically since 2015. Still at a discount. 

 

Prosus has been backing up the truck for the last 2-years. Still at a discount. 

 

Fairfax Financial arguably is still at a discount despite multiple years of execution and large share repurchases. 

 

MSTR has grown its BTC/share by ~20% per annum for the last two years and still trades at a discount to its BTC holdings on a diluted basis. 

 

All this nonsense of discounts being indicative of management behavior/quality and manage should 'do something about it' is so stupid when you consider all of the management's doing something about it and the 'problem' still persists. 

 

The 'problem' is actually an opportunity, all of these management's have taken advantage of that opportunity, and long term holders of each will benefit enormously when sentiment turns. Sentiment is the primary issue for any of these companies and sentiment is fickle and not within the control of management. 

Edited 50 minutes ago by TwoCitiesCapital

[CoGreenwich&Laight]

41 minutes ago, TwoCitiesCapital said:

Exor has been repurchasing shares opportunistically since 2015. Still at a discount. 

 

Prosus has been backing up the truck for the last 2-years. Still at a discount. 

 

Fairfax Financial arguably is still at a discount despite multiple years of execution and large share repurchases. 

 

MSTR has grown its BTC/share by ~20% per annum for the last two years and still trades at a discount to its BTC holdings on a diluted basis. 

 

All this nonsense of discounts being indicative of management behavior/quality and manage should 'do something about it' is so stupid when you consider all of the management's doing something about it and the 'problem' still persists. 

 

The 'problem' is actually an opportunity, all of these management's have taken advantage of that opportunity, and long term holders of each will benefit enormously when sentiment turns. Sentiment is the primary issue for any of these companies and sentiment is fickle and not within the control of management. 

Under no circumstance is IIFL capital a better investment than FIH at these prices. With the airport at 14x current year (not forward) and no value for the real estate, it’s worth 26. With their mediocre track record of returns at best while assuming the best case scenario for the airport, they should give up. They’ve had enough time. If this was an open end fund, the money would’ve flown out. And that’s who they work for. Carve out the airport and that’s how you get full value or a much higher trading value. With its growth and returns, The airport will not trade at any discount and that’s the bulk of the value here. Rest is all crap net of their piggy nepotism arrogant undeserved fees. Prosus and Exor have shitty assets. And plenty of funds do NOT trade at a discount. See what Boaz Weinstein is doing. Read his tweets if you don’t want to deep dive. 
And see the path CK hutch and Jardine are going down to close the gap to NAV. 

Edited 8 minutes ago by CoGreenwich&Laight