Author Topic: Fairfax Africa  (Read 40274 times)

petec

  • Hero Member
  • *****
  • Posts: 2816
Re: Fairfax Africa
« Reply #130 on: December 11, 2020, 12:57:31 AM »
Deal complete. The future will be very interesting.
FFH MSFT BRK BAM ATCO LNG TFG


petec

  • Hero Member
  • *****
  • Posts: 2816
Re: Fairfax Africa
« Reply #131 on: January 22, 2021, 07:20:07 AM »
Latest twist: https://www.heliosinvestment.com/uploads/files/HFP-Portfolio-Insurance-Arrangement-Jan-21-2021.pdf

The interesting bit is that Fairfax has underwritten a bunch of the investments that Helios inherited.

FFH MSFT BRK BAM ATCO LNG TFG

petec

  • Hero Member
  • *****
  • Posts: 2816
Re: Fairfax Africa
« Reply #132 on: January 22, 2021, 07:23:20 AM »
FFH MSFT BRK BAM ATCO LNG TFG

hobbit

  • Full Member
  • ***
  • Posts: 100
Re: Fairfax Africa
« Reply #133 on: January 22, 2021, 09:14:17 AM »
Latest twist: https://www.heliosinvestment.com/uploads/files/HFP-Portfolio-Insurance-Arrangement-Jan-21-2021.pdf

The interesting bit is that Fairfax has underwritten a bunch of the investments that Helios inherited.

I thought the plan for Helios was that partnering with Fairfax will give them more cred in the global market and help them with fund raising at their end . This is just asking Fairfax for money right after the close. and why is Fairfax bothered with Helios' second best ideas ( the first will go to the helios' fund I presume ) . Fairfax can get better exposure by investing directly in Fund 4 of Helios. And Fairfax has to underwrite the ' reference investments' ? why is that... what a mess...
« Last Edit: January 22, 2021, 09:19:33 AM by hobbit »

petec

  • Hero Member
  • *****
  • Posts: 2816
Re: Fairfax Africa
« Reply #134 on: January 22, 2021, 09:38:34 AM »
Why is Fairfax bothered with Helios' second best ideas (the first will go to the helios' fund I presume).

What makes you think this?
FFH MSFT BRK BAM ATCO LNG TFG

TwoCitiesCapital

  • Hero Member
  • *****
  • Posts: 2938
Re: Fairfax Africa
« Reply #135 on: January 22, 2021, 09:42:07 AM »
Latest twist: https://www.heliosinvestment.com/uploads/files/HFP-Portfolio-Insurance-Arrangement-Jan-21-2021.pdf

The interesting bit is that Fairfax has underwritten a bunch of the investments that Helios inherited.

I thought the plan for Helios was that partnering with Fairfax will give them more cred in the global market and help them with fund raising at their end . This is just asking Fairfax for money right after the close. and why is Fairfax bothered with Helios' second best ideas ( the first will go to the helios' fund I presume ) . Fairfax can get better exposure by investing directly in Fund 4 of Helios. And Fairfax has to underwrite the ' reference investments' ? why is that... what a mess...

I, too, am a little confused.

It seems Fairfax has underwritten an at the money put option in exchange for $3 million in annual premium and at-the-money warrants. Seems like this just leverages the exposure they currently have to FAH. 

If it goes well, they stand to make tens of millions. If it doesn't go well, they stand to lose tens of millions. All around though - not terribly concerning. The $3 million in annual premiums means that the fund has to have a -9% return over the next 3-years before Fairfax is out any cash.

That is certainly possible - maybe even likely - but seems to be giving Fairfax cheap exposure to the upside via the warrants and the downside is finite ($91 million), at a distance (-9% away minimum), and in the future (3 years before Fairfax has to pay the claims).

Seems like a decent way to leverage the exposure, but I'm not certain as to how portfolio insurance typically works or is priced to know how this compares to arms-length transactions.


hobbit

  • Full Member
  • ***
  • Posts: 100
Re: Fairfax Africa
« Reply #136 on: January 22, 2021, 10:07:17 AM »
Why is Fairfax bothered with Helios' second best ideas (the first will go to the helios' fund I presume).

What makes you think this?
they had a section in circular describing the conflicts policy --
 
The interests of Helios may conflict with the interests of the Corporation.

The Corporation will rely on the expertise of Helios (including the Partnership and the Manager, in its role
as sub advisor), in identifying and advising on investment opportunities, transaction execution and asset
management capabilities. Helios also provides similar services to other subsidiaries of funds it manages.
The advisory services to be provided by the Partnership under the IMA are to be provided on a nonexclusive basis to the Corporation and its subsidiaries, and accordingly, there are no restrictions on Helios
from providing similar services to other entities, including certain funds managed by Helios, or from
engaging in other activities in the future (whether or not their investment objectives, strategies and policies
are similar to those of the Corporation). The Corporation acknowledges that Helios will allocate investment
opportunities among the Corporation and its subsidiaries and the other portfolio clients of Helios in
accordance with Helios’ Conflicts Policy. As a result of this Conflicts Policy, the Corporation may, from time
to time, be precluded from participating in an investment opportunity available to the Partnership and the
Manager, in its role as sub advisor, that would otherwise be compatible with the Corporation’s investment
objectives and restrictions.


petec

  • Hero Member
  • *****
  • Posts: 2816
Re: Fairfax Africa
« Reply #137 on: January 22, 2021, 10:38:37 AM »
That is legal wording about a possibility. It doesn’t justify your presumption.

Plus, the Helios fees go to HFP so success in other funds is a good thing.
FFH MSFT BRK BAM ATCO LNG TFG

SafetyinNumbers

  • Hero Member
  • *****
  • Posts: 785
Re: Fairfax Africa
« Reply #138 on: January 22, 2021, 04:33:10 PM »
Are the “Reference Investments” legacy FAH investments or Helios?

SafetyinNumbers

  • Hero Member
  • *****
  • Posts: 785
Re: Fairfax Africa
« Reply #139 on: January 23, 2021, 05:07:42 AM »
Are the “Reference Investments” legacy FAH investments or Helios?

I guess that question was already answered.

This deal seems like it’s all about aligning incentives. New management did not want to underwrite legacy investments and Fairfax gets more leverage to the upside on the whole portfolio. Better for Helios shareholders but good for both.