Fairfax India new issue

[nwoodman]

2 hours ago, glider3834 said:

another article 

https://www.ft.com/content/227514cd-426f-4b1a-a9cd-5652f8c6abc0

Cheers, paywalled for me.  Any additional metrics or info?    Thanks @netcash1 for flagging this

[glider3834]

3 hours ago, nwoodman said:

Cheers, paywalled for me.  Any additional metrics or info?    Thanks @netcash1 for flagging this

unfortunately I am paywalled too now

[SafetyinNumbers]

See the FT article attached.

 

BIAL is also working on their master plan which they revise every few years. It has some operational details included in the article.

 

https://indianexpress.com/article/cities/bangalore/bengaluru-airport-master-plan-renovation-9049746/

[nwoodman]

Thanks @SafetyinNumbers.  That multiple is mighty impressive.  

 

“That is a near-30 per cent premium to Heathrow's regulated asset base. It is also about 13 times next year's ebitda, projected to fall given the cut in regulated landing fees. Listed competitors travel at around 10 times. Vinci, which bought 50.1 per cent of Gatwick in 2018, paid more, but that was for a pre-pandemic majority purchase. Ardian and PIF might end up stuck at 25 percent.”

[ICUMD]

BIAL Record Profits - 63.3 M USD 2023 yr end.

 

Finally some outstanding news I've been eagerly waiting for. I guess Fairfax India does know how to run airports.

 

https://www.moneycontrol.com/news/technology/bengaluru-airport-most-profitable-in-the-country-in-fy23-ahmedabad-incurs-highest-losses-11859721.html

Edited December 11, 2023 by ICUMD

[dartmonkey]

9 hours ago, ICUMD said:

BIAL Record Profits - 63.3 M USD 2023 yr end.

 

Finally some outstanding news I've been eagerly waiting for. I guess Fairfax India does know how to run airports.

 

https://www.moneycontrol.com/news/technology/bengaluru-airport-most-profitable-in-the-country-in-fy23-ahmedabad-incurs-highest-losses-11859721.html

Yes, but I believe only 49% of that is for Fairfax, so $31m, and that is for an asset that is on the books for $1,233.7 (Dec 2022). However, we expect it to get much more profitable as its volume scales with little additional capital invested and unregulated non-aero revenue and real estate development revenues grow. So this is a great start, and hopefully means it may not need too much more capital.

[ICUMD]

4 hours ago, dartmonkey said:

Yes, but I believe only 49% of that is for Fairfax, so $31m, and that is for an asset that is on the books for $1,233.7 (Dec 2022). However, we expect it to get much more profitable as its volume scales with little additional capital invested and unregulated non-aero revenue and real estate development revenues grow. So this is a great start, and hopefully means it may not need too much more capital.

I believe they have increased ownership to 54%.

Otherwise you are correct.  This is a great start.  I don't know what loans they may have taken on to fund T2 development, but the profitability allows for them to develop and refine and develop businesses within the existing physical structure.  

 

Also, will hopefully attract investors for a planned IPO under Anchorage,  marking to market this key asset.

[dartmonkey]

18 hours ago, ICUMD said:

I believe they have increased ownership to 54%.

Otherwise you are correct.  This is a great start. 

I just took the 49% from the 2022 AR. Yes they own 54%, but I guess there are ptions or warrants outstanding that dillute this to 49%:

p. 6: 

Investment / Date of Initial Investment / Ownership / Amount Invested / Fair Value (Dec 2022) / Annualized Return

Bangalore International Airport (3) / March2017 / 54.0% / 653.0 / 1,233.7 / 12.2%

 

(3) Fairfax India’s effective interest in Bangalore International Airport is 49.0%(on a fully diluted basis).

[gfp]

I can't find the post from the other day about the 7.5 million share cross on FIH.U that occurred after hours.  FWIW, this was just intercompany transfers of Fairfax India stock between different Fairfax insurance subs.

[giulio]

So is this related to the sale of Riverstone? the run off subsidiary? Ffh had to sell or purchase shares at a fixed amount by year end 2023 iirc. 

 

By shares I mean stocks held as part of Riverstone investments portfolio.

Edited December 12, 2023 by giulio

[gfp]

2 hours ago, dartmonkey said:

I just took the 49% from the 2022 AR. Yes they own 54%, but I guess there are ptions or warrants outstanding that dillute this to 49%:

p. 6: 

Investment / Date of Initial Investment / Ownership / Amount Invested / Fair Value (Dec 2022) / Annualized Return

Bangalore International Airport (3) / March2017 / 54.0% / 653.0 / 1,233.7 / 12.2%

 

(3) Fairfax India’s effective interest in Bangalore International Airport is 49.0%(on a fully diluted basis).

 

 

This press release from this evening seems relevant -

https://www.fairfaxindia.ca/press-releases/fairfax-india-completes-acquisition-of-an-additional-7-interest-in-bangalore-international-airport-limited-2023-12-12/

 

Quote

Following completion of the second closing, Fairfax India’s aggregate share ownership in BIAL has increased to 64% (20.4% held by its wholly-owned subsidiary and 43.6% held by its indirect subsidiary, Anchorage Infrastructure Investments Holdings Limited) from 54% last year.

 

Edited December 12, 2023 by gfp

[dartmonkey]

Super! They're really going all in on this bet. The airport was already abut 40% of their assets, now it will be over half, if their valuation of the whole airport at $2.5b is correct. 

[StubbleJumper]

57 minutes ago, dartmonkey said:

Super! They're really going all in on this bet. The airport was already abut 40% of their assets, now it will be over half, if their valuation of the whole airport at $2.5b is correct. 

 

Didn't they just sell a slice of that airport to OMERS a couple of years ago?  And now they are buying another slice?

 

 

SJ

[SafetyinNumbers]

8 minutes ago, StubbleJumper said:

 

Didn't they just sell a slice of that airport to OMERS a couple of years ago?  And now they are buying another slice?

 

 

SJ

sold a piece to establish Anchorage and get an arms length valuation. They announced this purchase quite a while ago. It’s just closing now.

[SafetyinNumbers]

3 hours ago, giulio said:

So is this related to the sale of Riverstone? the run off subsidiary? Ffh had to sell or purchase shares at a fixed amount by year end 2023 iirc. 

 

By shares I mean stocks held as part of Riverstone investments portfolio.

That seems to be the case. I don’t think it impacts the ~43% ownership because these shares were included in the proxy. Does anyone disagree?

 

On a side note, it looks like the FIH AGM is the day before the FFH meeting at the Ritz. Anyone have an idea why?

 

[Xerxes]

Ok I guess now we need to wait 15-20 years for the Saudi to make an offer for the airport. 
 

 

 

 

Edited December 13, 2023 by Xerxes

[giulio]

8 hours ago, SafetyinNumbers said:

That seems to be the case. I don’t think it impacts the ~43% ownership because these shares were included in the proxy. Does anyone disagree?

You are correct, it should not change the ownership % but FFH still has to pay cash for those shares. 

From Q3 2023: At September 30, 2023 the fair value of the AVLNs was a derivative obligation of $21.5 (December 31, 2022 – derivative asset of $30.7), with a remaining guaranteed value of $352.3

[gfp]

"when painting the tape is good for shareholders" starts today (the first day of the 10-day VWAP period)

[Dipesh Patel]

https://financialpost.com/globe-newswire/fairfax-india-announces-election-by-fairfax-financial-holdings-limited-to-receive-payment-of-performance-fee-in-cash

[TwoCitiesCapital]

25 minutes ago, DM1 said:

https://financialpost.com/globe-newswire/fairfax-india-announces-election-by-fairfax-financial-holdings-limited-to-receive-payment-of-performance-fee-in-cash

 

Look at that! 

 

 

[ICUMD]

Any draw backs or advantages to shareholders of Fairfax India in the performance fee being paid in cash rather than shares?  

 

I guess we avoid dilution at these ridiculously discounted share prices! 

Edited December 16, 2023 by ICUMD

[SafetyinNumbers]

2 hours ago, ICUMD said:

Any draw backs or advantages to shareholders of Fairfax India in the performance fee being paid in cash rather than shares?  

 

I guess we avoid dilution at these ridiculously discounted share prices! 

I think dilution would have been ~1.5% depending on how big the performance fee will end up. I think it’s also fair to say the market was expecting the shares to be issued. Both good reasons for the shares to benefit on Monday at least in the short term.
 

A lot of investors didn’t want to own the shares because of this clause. Despite it not having a material impact on investors since inception, the perspective was understandable. It will be interesting if they reconsider. That pool of investors might be big enough to close the discount materially.  That’s how the shares benefit in the long term. 
 

This move by Fairfax might generate a lot of Social Value or in FIH’s case, reduce the negative Social Value as Market Value is well below Intrinsic Value.

it’s hard to predict what will happen with NAV discounts but the narrative just got easier to sell. The stock is at new 52-week highs and there is nothing macro guys like more than strong technicals and a country bet.
 

India is flexing its strategic importance to every super power in the world. India and Indians own a lot of gold so there is some optionality that the rupee will benefit materially if gold rallies materially. Indian debt is going into the benchmark next year which should lower the cost of capital and also provide another reason for the rupee to strengthen. Oil is cheap and they buy it even cheaper.

 

2024 brings a few potential meaningful catalysts. The biggest being the IPO of Anchorage which has been taking forever. I assume part of what led to the sale of the additional 10% of BIAL to FIH were the other counterparties was not wanting to wait for a longer process and FIH willing to pay a fair price.

 

CSB Bank is reported to be bidding for a partially state-owned bank that is much bigger. I’m not sure what kind of deal structure is possible but it seems like it could have a lot of upside. CSB is up 64% this year and according to the internet has a P/E of 12. 
 

They own a lot of interesting businesses. The public stocks are going up and my bet is the private ones are marked conservatively as a group. 
 

I think the l/s hedge funds I sold too in 2003 would have been all over this story but they are all gone and there are too many ideas for those of us that are left. The discount might go back to 40% but book value could still grow pretty fast depending on how the world turns out. 
 

i’m going to trade around a core position which probably means I’ll sell too much too early and I’m elated with that outcome vs the alternative where BVPS doesn’t CAGR north of 10% which is always possible but I think unlikely. You may think otherwise.
 

 

 

[This2ShallPass]

4 hours ago, SafetyinNumbers said:

This move by Fairfax might generate a lot of Social Value or in FIH’s case, reduce the negative Social Value as Market Value is well below Intrinsic Value.

Agreed. If they deferred payment that would have been something but will take this. 82M fees still very high, 5% of market cap.

 

I would like to think all my complaining helped Surely someone there is reading a board dedicated to Fairfax..

[Haryana]

 

 

 

[TwoCitiesCapital]

1 hour ago, Haryana said:

 

 

 

 

Sentiment

 

All that has that has ever mattered. 

 

I guess it takes a pivot by the Fed more than any action Fairfax or partners could've taken. 

Edited December 18, 2023 by TwoCitiesCapital