Watsa's Bangalore International Airport investment plan gets government nod

[caprivenky]

Indian-born Watsa's Toronto-based Fairfax Group had in March last year, announced its decision to buy a 33% stake in BIAL from GVK Group for Rs 2,149 crore, valuing the eight-year-old airport at about Rs 6,500 crore. A month later, Fairfax signed another deal to buy 5% stake held by Flughafen Zurich AG in BIAL.

 

GVK had said the sale was one of its fund-raising steps to reduce debt. The conglomerate has total debt of over Rs 22,000 crore on its books.

 

The Bangalore airpo ..

 

Read more at:

http://economictimes.indiatimes.com/articleshow/56606882.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

[nwoodman]

Looks like an interesting prospect with a strong growth profile

 

http://m.economictimes.com/news/company/corporate-trends/prem-watsa-deepak-parekh-and-2-others-join-bial-board/articleshow/57927501.cms

[wondering]

http://www.fairfaxindia.ca/news/press-releases/press-release-details/2017/Fairfax-India-to-Acquire-Additional-10-Interest-in-Bangalore-International-Airport-Limited/default.aspx

[dartmonkey]

It is odd that they would buy 38% in March, for $25.22B INR, valuing the total company (BIAL) at 66.37B INR, and now they are buying another 10% for 12.9B INR, valuing the whole company at 129B INR!!

 

But in fact, the deal was first announced in March 2016, at 2149 crore for 33% of BIAL, so 6512 crore for the whole thing.

 

Then 1 month later, another 5%, at an undisclosed price.

 

Then in March 2018, the 38% gets government approval, and we find out the price was 2522 crore, suggesting that the additional 5% stake was 373 crore, valuing BIAL at 7460 crore.

 

So the timeline of sales is:

 

March 2016: 33% stake of BIAL valued at 6512 crore, from GVK Group

April 2016: 5% stake of BIAL valued at 7460 crore, from Flughafen Zurich

June 2017: 10% stake of BIAL valued at 12900 crore, from GVK Group again

 

This suggests (someone check my math) that FIH is prepared to pay more than twice the price, a year later. Either they got a great deal a year ago, or things are looking a lot better in the past 15 months. In any case, their initial stake of 2522 crore for 38% (about $390M US) would be worth almost the double now. No wonder the shares of FIH are up...

[DooDiligence]

It would have been great to have gotten in back at OMERS prices.

 

I think the airport is very valuable (don't ask me how much, I'm not that guy.)

 

Bangalore is the silicon valley of India & they have 460 acres of developable property (anyone who can provide locations of said properties will hereby be worshipped as a God!)

[DooDiligence]

Looks like it cost $530M USD for the entire stake (including the semi-hidden assets.)

 

Oh & lest we all forget (see attachment...)

 

Can anyone speak to the possibility of a PFIC taking full ownership of a business?

 

What do they do then? Spin out the stake?

PFIC.pdf

[hobbit]

It is odd that they would buy 38% in March, for $25.22B INR, valuing the total company (BIAL) at 66.37B INR, and now they are buying another 10% for 12.9B INR, valuing the whole company at 129B INR!!

 

But in fact, the deal was first announced in March 2016, at 2149 crore for 33% of BIAL, so 6512 crore for the whole thing.

 

Then 1 month later, another 5%, at an undisclosed price.

 

Then in March 2018, the 38% gets government approval, and we find out the price was 2522 crore, suggesting that the additional 5% stake was 373 crore, valuing BIAL at 7460 crore.

 

 

So the timeline of sales is:

 

March 2016: 33% stake of BIAL valued at 6512 crore, from GVK Group

April 2016: 5% stake of BIAL valued at 7460 crore, from Flughafen Zurich

June 2017: 10% stake of BIAL valued at 12900 crore, from GVK Group again

 

This suggests (someone check my math) that FIH is prepared to pay more than twice the price, a year later. Either they got a great deal a year ago, or things are looking a lot better in the past 15 months. In any case, their initial stake of 2522 crore for 38% (about $390M US) would be worth almost the double now. No wonder the shares of FIH are up...

 

if you take 2Bn valuation for BIAL and the gains from IIFL.BV is around 16.50

[nwoodman]

BENGALURU: Karnataka's Energy Minister D.K.Shivakumar has sought the intervention of Chief Minister Siddaramaiah to block any further sale of stake by the Hyderabad-based GVK Group in Bangalore International Airport Limited (BIAL). Canadian billionaire Prem Watsa-controlled Fairfax Group has announced its plans to purchase 10% of reminder stake from the GVK Group which will pave way for GVK Group's complete exit from the international airport.

 

http://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/karnataka-minister-seeks-to-block-gvk-groups-stake-sale-in-bengaluru-airport-to-fairfax/articleshow/59193671.cms

[DooDiligence]

BENGALURU: Karnataka's Energy Minister D.K.Shivakumar has sought the intervention of Chief Minister Siddaramaiah to block any further sale of stake by the Hyderabad-based GVK Group in Bangalore International Airport Limited (BIAL). Canadian billionaire Prem Watsa-controlled Fairfax Group has announced its plans to purchase 10% of reminder stake from the GVK Group which will pave way for GVK Group's complete exit from the international airport.

 

http://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/karnataka-minister-seeks-to-block-gvk-groups-stake-sale-in-bengaluru-airport-to-fairfax/articleshow/59193671.cms

 

Management looks pretty strong to me & I don't see this as anything other than a vigilant politician doing what he does.

 

This is an important piece of infrastructure & questions regarding ownership should be asked by government leaders (they'd be remiss by NOT doing so.)

 

However:

 

http://www.bengaluruairport.com/ourBusiness/aboutBia.jspx?_afrLoop=519549602842127&_afrWindowMode=0&_adf.ctrl-state=195pv9apuw_329

 

VP Watsa is on the BOD.

 

Does anyone have evidence of infighting or is this pretty much a hands off advisory dealio?

[nwoodman]

Right back at ya  ;)

 

Dismissing Shivakumar’s views that the sale must be blocked, Deshpande said the state government cannot get involved in it.

 

“This is a transaction between GVK and Fairfax. I can’t tell GVK to sell or not to sell,” the minister told Express, adding, “The parties need to inform only the BIAL board headed by Chief Secretary.”

http://www.newindianexpress.com/cities/bengaluru/2017/jun/23/industries-minister-deshpande-snubs-energy-minister-shivakumar-over-gvk-group-stake-sale-1619899.html

[nwoodman]

Some articles that may be of interest in determining the validity of BIAL as a toll bridge

 

1. Commentary on an alternative airport in Hosur:

 

(i) "Due to the presence of IT and IT Enabled Sector (ITES) firms in the south and east of the city, Hosur Airport would have been a natural choice if Bengaluru was to get a new airport. "

 

(ii) "BIAL, along with its counterpart Hyderabad International Airport Limited (HIAL) have an exclusivity clause in their agreements.

 

Clause 5.2 of the concession agreement states:

 

Exclusivity International: No new or existing airport shall be permitted by GoI to be developed as, or improved or upgraded into, an International Airport within an aerial distance of 150 kilometres of the Airport before the twenty-fifth anniversary of the Airport Opening Date. Domestic: No new or existing airport (except for Mysore and Hassan airports) shall be permitted by GoI to be developed as, or improved or upgraded into, a Domestic Airport within an aerial distance of 150 kilometres of the Airport before the twenty-fifth anniversary of the Airport Opening Date.

https://swarajyamag.com/infrastructure/hosur-airport-may-not-be-able-to-solve-south-bengalurus-woes 

 

 

2. Rail access to the airport has been approved (whatever that means in terms of timing):

 

(i) "As if there isn't enough traffic in Bengaluru already, a commute to the city’s airport is close to a nightmare for those living far from it. In most cases, flying from Bengaluru to another city and beyond takes lesser time than commuting from one's house to the airport -- that is how far it is!"

 

https://swarajyamag.com/infrastructure/bengaluru-suburban-rail-10-possible-rail-routes-to-decongest-indias-silicon-valley

 

 

(ii) BEGALURU: The Metro link to Kempegowda International Airport (KIA) inched closer to realisation, with the Bangalore Metro Rail Corporation Ltd (BMRCL) calling for tenders to take up land and property survey along the proposed route - from Nagawara to KIA.BMRCL proposed five possible routes to KIA, and sought public opinion on the same. Subsequently, the Nagawara-Jakkur-Yelahanka line that runs parallel to Ballari Road was finalised for the Metro link.

 

http://timesofindia.indiatimes.com/city/bengaluru/bmrc-sets-ball-rolling-on-metro-link-to-airport/articleshow/59262506.cms

[nwoodman]

Fairfax India closed on the 10% acquisition from GVK, now officially own 48% of BIAL

 

http://www.fairfaxindia.ca/news/press-releases/press-release-details/2017/Fairfax-India-Acquires-an-Additional-10-Interest-in-Bangalore-International-Airport-Limited/default.aspx

[alpha]

Anyone know why FIH.U spiked 4% today? The only news I have seen recently was the Bangalore Airport deal closing yesterday...

[Txvestor]

They sold 12% of ICICI lombard to Warburg Pincus in May 2017 valuing the whole thing at 203B rupees so that's like $US3.2B right.

Now a couple of months later the IPO might value 19% of it at Rs60B or $932M? That values the whole thing at $4.9B right? Did Prem just leave a whole lot of money on the table?

 

https://finance.yahoo.com/news/icici-lombard-files-first-indian-150837598.html

[nwoodman]

Makes excellent sense if Fairfax is involved with HAL. Ensures they are then involved with all major air traffic serving Bangalore

 

http://m.deccanherald.com/articles.php?name=http%3A%2F%2Fwww.deccanherald.com%2Fcontent%2F627485%2Fhal-fairfax-keen-reopen-old.html

 

"Fairfax is looking at a solid business model so that operation of the old airport becomes viable. Besides running the airport, Fairfax is ready to get involved in operating a maintenance, repair and overhaul (MRO) facility or a special economic zone (SEZ) for aerospace industries," said a government source privy to this development.

 

The possibility of HAL airport resuming operation for domestic flights is currently slim due to the concession agreement signed between the civil aviation ministry and private airport operator. As per the agreement, a second airport within a radius of 150 km from the Kempegowda International Airport (KIA) at Devanahalli is not permitted. However, this clause is likely to be relaxed if Fairfax Group, which is operating KIA, does not oppose the move to operate a second airport.

 

Recently, HAL wrote to the Ministry of Civil Aviation requesting its inclusion in the list of airports identified for regional connectivity scheme UDAN, so that domestic travel can be made affordable.

 

"I would like to inform you that HAL has written to the civil aviation ministry to include the airport in the list of airports under UDAN. Currently, HAL is not in the list. HAL has the airport infrastructure in Bengaluru to undertake domestic flight operations 24/7," a HAL spokesperson said.

 

The move by HAL is viewed by aviation industry experts as a step to lure Fairfax to start operating domestic flights from the defence ministry-owned HAL airport.

 

Commenting on the development, Karnataka Tourism Minister Priyank Kharge said the state government is ready to cooperate with the Centre and Fairfax to run the HAL airport in a profitable way. "It will boost the tourism and industrial sectors of the state. The central business district of Bengaluru is looking at an airport which eases traffic and expands connectivity,” Kharge said.