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Looks like Sanmar Chemical is also planning IPO.



Not clear about valuation but with Sanmar and BIAL IPO, Fairfax India's largest private holding should get public valuation and hence added transparency for Fairfax India valuation. 

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I have really soured on this company after building a large position over the last couple years.

It started off with a basket of traditional value investments that were easy to predict future earnings based on publicly available data and could simply be held for long the long term for modest gains.

Now it seems to becoming a deal making machine for the sake of making deals, trying to predict future earnings and valuation is becoming too complex.

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Fairfax India, similar to Fairfax, has been a tough buy and hold stock for investors. However, trading at $12.60 today the stock, at current levels, looks cheap to me. I only have a very small position but would be happy more on weakness (I still own a bunch of Fairfax). 

The good news is the equities in Fairfax India that are publicly traded are on fire. As a result book value will be up significantly in Q1. 

The near term challenge with Fairfax India is BIAL. Not sure how fast airport travel will pick up in 2021 but it makes sense to me it will take 12-18 months to get back to the new normal. If investors remain luke warm on airport assets this could hold down the stock price of Fairfax India.

I am very much in favour of the two announced IPO’s (Seven Islands and Sanmar). It appears financial markets are keen for IPO’s and the businesses need $ for growth and to manage their balance sheets. With 2 more companies publicly traded this will make it more transparent to value Fairfax India. It also looks like Fairfax/Fairfax India is sending the message to their equity holdings that they need to swim on their own moving forward (with less support from the mother companies) - at least i hope this is the case 🙂 

And Anchorage, when it finally happens, will be interesting to learn more about. It adds complexity. And it is very ambitious. Infrastructure is a hot sector right now. Fairfax/Fairfax India has a pretty good long term track record investing in India so i am going to give them the benefit of the doubt for now. 

Another layer is how one views emerging market in the coming years. My guess is India could perform well and i like getting exposure through Fairfax and Fairfax India (where the 2 stocks are priced today). Both look to be trading at a nice discount 🙂 

Edited by Viking
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Attached below is a spreadsheet that captures the value of Fairfax India's publicly traded equity holdings at March 31. They were up US $331 million (35%) in Q1 to $1,267 million = an increase of $2.21/share. Not too shabby. 🙂 BV at Dec 31 was $16.37.

When Fairfax India reports Q1 earnings we should see a nice increase in BV to perhaps around $18/share, a new record high. Shares look cheap to me currently trading at $12.45. I was adding to my position late last week.

Fairfax India is also in the process of IPO'ing three holdings: Seven Islands, Sanmar and Anchorage (BIAL). Once completed (likely later this year) more than 90% of Fairfax India's holdings will be publicly traded stocks and this will make it pretty simple for investors to value FIH.

If the shares stay this cheap one has to wonder why FIH does not get more aggressive with share buybacks. Especially once the Anchorage transaction is approved and they receive proceeds of $130 million.

Looking further out, if FIH shares stay cheap into 2022 (permanent large discount), I wonder if Fairfax decides to move to 100% ownership. Similar to what Brookfield is doing with Brookfield Property. Perhaps the first step in this happening will be in FIH gets aggressive with share buybacks (which will increase FFH ownership); this is what we saw at Brookfield Property.


So Fairfax India launched in 2016 at a price of $10; they raised more capital in late 2016 at $11.75/share. Shares are trading in April 2021 at $12.45.

Since IPO in 2016, looking at the publicly traded stocks, Fairfax India is up almost 100% (Cost = $657 million; March 31 value = $1,267). Bottom line, Fairfax India has performed very well with its publicly traded stock investments. These companies represent 38% of the fair value of Fairfax India's total equity holdings.

Looking at the private equity holdings the only poor performer has been NCML (down about $90 million). All the other private holdings are worth more today than they were purchased for. (Cost = $1,205; Dec 31 fair value estimate = $2,070 million). BIAL, at 42% of FIH, is the big fish here.   

So when i look at the full body of work (publicly traded and private investments) it looks to me like Fairfax India has done a pretty good job since 2016. Fairfax India has also done a fair bit of work positioning the holdings to be successful: splitting IIFL into 4 companies; management of BIAL; new management at CSB bank; re-org of Privi and Fairchem Organics. IPO of Seven Islands and Sanmar two more steps in the right direction. Bottom line, most of the companies Fairfax India owns look to be well managed and they look positioned to be successful moving forward. 

Fairfax Equity Holdings Mar 31 2021.xlsx

Edited by Viking
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