Fairfax Africa

[jfan]

Did anybody attend the hfp agm yesterday? Will they be posting up the agm video?

[wondering]

both investor day and AGM videos have been posted

[wondering]

https://www.heliosinvestment.com/helios-fairfax-partners

[This2ShallPass]

Curious if anyone has taken a look at Fairfax Africa recently. I have been selling some Fairfax this year (to keep at 30% of my pf but it keeps going up:)) and want to redeploy the cash.

 

Looks like the new guys from Helios haven't made much of an impact, 5 yr return at -50%.

[wondering]

I have been following this company.  The quick summary is that they have almost sold all the Fairfax Africa legacy investments.  They have made some new investments - example some African fintech, a Morrocan company (can't remember if it is a grocery chain or medical supply company or maybe both - I have a crap memory).  They have added more Helios funds - such Sports and Entertainment (NBA Africa)

 

I think until there is more market interest in emerging markets/Africa this investment will be in the doldrums.  Once there is greater interest, I think Helios Fairfax will make more money from the managements fees from the various Helios Funds.

 

The plus side is that Wall Street has completely lost interest in Africa, and Helios is the only major player there so they have the market to themselves.  

 

Current management appears competent and honest to me (go to the Helios Fairfax, you can watch investor presentation videos).  The problem is the lack of interest - why invest in Africa while the US dollar is riding high and there so much momentum will US tech.

[This2ShallPass]

Thanks wondering. Investing in Africa now might pay dividends 5-10 years later.

 

Do you have any thoughts on the companies they are investing in, are they high quality? Do they have any crown jewel kind of investments? I'll also do my research but wanted to get your take.

Edited December 10, 2024 by This2ShallPass

[jfan]

The crown jewel is the part ownership of helios the asset manager. 

[Xerxes]

1 hour ago, jfan said:

The crown jewel is the part ownership of helios the asset manager. 

and that is something that even Fairfax India does not have. An asset manager play for third party funds to manage. 

[wondering]

The price drop 28% today to 1.96/share US.  Anyone know the reason

 

[petec]

No idea. I have a gut feeling that I ought to own this but I am glad I don't!

[This2ShallPass]

On 1/7/2025 at 5:22 AM, petec said:

I have a gut feeling that I ought to own this but I am glad I don't!

Exact feelings I have:)

[TwoCitiesCapital]

I'd be more interested if there were impactful share repurchases occurring. Even if it was only for 3-5% of the shares. At such a large discount to their supposed NAV, share repurchases is almost a guaranteed 100% return which has got to be an easier lay-up than some of the businesses they're deploying capital into. And yet...they aren't. 

[jfan]

Anybody attend Helios presentation? I was planning to watch online but there was a power outage at the conference centre so the feed was down.

[nwoodman]

9 hours ago, jfan said:

Anybody attend Helios presentation? I was planning to watch online but there was a power outage at the conference centre so the feed was down.

 

Some notes  from the meeting:

1. Strategic Clarity & Investment Focus

 

Helios Fairfax Partners has sharpened its investment focus around four core themes aligned with Africa’s long-term growth:

 

“There’s essentially two mega trends that are most relevant to investing in Africa now and far into the future. One is demographics and urbanization, and the other is technology.”

 

HFP’s investment strategy emphasizes:

• Consumer Non-Discretionary

• Digital Infrastructure

• Financial Services & Fintech

• Tech-Enabled Business Services

 

These sectors are selected for their secular growth and resilience, forming the backbone of both the co-investment and seeding efforts.

 

2. Legacy Asset Transition – Nearly Complete

 

A major strategic shift has been the wind-down of legacy assets from the pre-Helios era:

 

“You fast forward to 2024, that 100% [legacy portfolio] is now 8%… and the remaining 92% is represented by Helios-managed investments.”

 

• ~$280M in legacy assets (2020) reduced to ~$22M by 2024.

• “We’ve retained or recovered at least 90% of the value of that legacy portfolio.”

 

This capital was redeployed into high-conviction, growth-aligned investments.

 

3. High-Conviction Co-Investments & Venture Bets

 

HFP has demonstrated disciplined deployment into high-growth opportunities:

 

Co-Investments:

• Tron (medical distribution in Morocco)

• Helios Towers

• M2P (banking SaaS for India, Africa, MENA)

 

“Our co-investments, taken as a whole, were up 17% year on year… up about 50% since inception – that’s the 1.5x you see.”

 

Venture & Seeded Investments:

• Galatea Bio (genetic data for drug discovery)

• Moment (African payment aggregation)

• SeamlessHR (enterprise SaaS for HR)

 

“The digital ventures portfolio was up 10%, and our sports & entertainment investments were up 18%.”

 

These investments outperformed both local and global benchmarks:

• Co-investments beat MSCI Africa by 14 pts, S&P 500 by 4 pts.

• Seeded investments beat MSCI Africa by 10 pts .

 

“It’s clear we are generating quite material alpha, which is obviously the point.”

 

4. Fee and Carry Income – A Key Weakness, but Improving

 

The transition to a multi-strategy platform has temporarily weighed on earnings:

 

“In 2024, we received no TopCo distributions into HFP… the residual revenue effect of our below-target 2020 fundraising.”

 

“So, the present is not great, but the outlook… is generally positive in this regard.”

 

Current fundraising momentum is encouraging:

• Private Equity Fund V: Near first close toward $750M

• Climate Fund: $200M raised, targeting $400M

• Sports & Entertainment: $50M of $75M secured

 

“The funds that really make the biggest difference from a fee standpoint are going quite well.”

 

5. Market Discount – A Story of Complexity, Not Fundamentals

 

Despite improving fundamentals, the stock trades at a deep discount:

 

“As of March 31… the shares are at a minimum, 60 to 70% of the value.”

 

“The share price is close to an all-time low… I think it’s probably close to the largest [discount] that it’s been.”

 

Management attributes the discount to structural opacity:

 

“It feels… quite difficult for people to connect all of the dots amidst all of the noise that’s been going on.”

 

 

6. 2024 Financial Performance – Transition Pain Reflected in Numbers

 

• NAV dropped from $500M to $423M, down 12% YoY.

• Driven by:

• $55M drop in carried interest valuation

• $22M in startup/transitional costs

• Missed 15% compounding target, but underlying investments performed well .

 

“We’re not there yet… but we believe the groundwork has been laid.”

 

 

7. Organizational Stability and CFO Transition

 

New leadership is in place to streamline financial reporting and operations:

 

“We appointed an interim CFO… Mike Corporal… 25 years in senior finance roles including CFO at Franklin Templeton.”

 

A simplification plan is underway to make reporting and valuation clearer to investors.

 

Investor Outlook

 

The core investment strategy is showing strong early results. The transition from legacy holdings is nearly complete, co-investments are compounding at ~19% IRR, and seeded investments are performing well. Fundraising is improving, and organizational streamlining is in progress.

 

The primary challenge remains narrative clarity and income visibility. If the team delivers on simplification and sustained fee income, the discount could narrow materially.

[wondering]

Second quarter earnings. 

 

https://www.heliosinvestment.com/uploads/files/HFP-2025-Q2-Press-Release_1.pdf

 

book value per share increased to 3.95/share from 3.85 Q1.

 

Net income for 1st 6 months $12.4M vs net loss of 21.2M in first 6 months of 2024.

 

Perhaps too early to say they are turning the corner.  

 

Currently selling at 50% to book value

 

 

[hardcorevalue]

As a shareholder of fairfax india for half a decade, of an obscure canadian listed overseas fund I've seen how these vehicles will typically trade at a discount for many years!

[TwoCitiesCapital]

2 hours ago, hardcorevalue said:

As a shareholder of fairfax india for half a decade, of an obscure canadian listed overseas fund I've seen how these vehicles will typically trade at a discount for many years!

 

Particularly ones who haven't performed well and aren't taking serious consideration of capital return via buyback. 

 

Would be for more interested in Fairfax Africa if they initiated a tender at these prices. 

[wondering]

3rd quarter release.  Helios is slowing turning the corner.  Book value is now 4.05/share. (vs 3.84/share at Dec 2024).  Nine months earnings 0.20/share (vs loss of 0.16/share first nine months of 2024)

 

https://www.heliosinvestment.com/uploads/files/HFP-2025-Q3-Press-Release-Final.pdf

[wondering]

4th quarter release.  Record annual earnings 41M or $0.37/share since HFP was established in 2020.  Book value per share $4.22/share, increase of 10% from start of year.  

 

https://www.heliosfairfax.com/helios-fairfax-partners/news/q4-2025-press-release

[TwoCitiesCapital]

Have they ever addressed why they're not doing buybacks or when they'd consider them? 

 

Expected return of doing so is ~120% vs this 10% their investments are producing? Seems like SOME capital should be allocated to this activity and yet outstanding shares are increasing? 

 

 

[Vanshon]

Interesting last two days at the end of the quarter – up 35% (on higher volume) since Friday’s close.  NCIB finally getting used?

[SafetyinNumbers]

Any reason in particular for the heavy volume today? I started a small position after the investor presentation because it seems like BVPS growth has turned the corner.

[Vanshon]

No news that I could find. It felt like whoever has been selling since the AGM decided to finish liquidating yesterday regardless of the price?  It’ll be interesting to see what the price action and volume are like today - I took it as an opportunity to average down yesterday.