Author Topic: Fairfax India new issue  (Read 188162 times)

ICUMD

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Re: Fairfax India new issue
« Reply #400 on: April 18, 2020, 11:22:32 AM »
Correct me if I'm wrong, but since they get a regulated 16% return on aero operations, they will never suffer loss on core operations.
FIH.U TCEHY, IFFNY, BRK.B


petec

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Re: Fairfax India new issue
« Reply #401 on: April 22, 2020, 03:55:15 AM »
I have not scoured the AR yet. Does anyone know if the "ratchet" in the OMERS deal includes a deadline for an IPO? because
a) if not then the ratchet is somewhat irrelevant.
b) if so, and it is any time soon, then FIH are going to give away a lot of BIAL shares. Coronavirus and full IPO valuations are not compatible.
FFH MSFT BRK BAM ATCO LNG IHG TFG CGT DC/A

hobbit

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Re: Fairfax India new issue
« Reply #402 on: April 22, 2020, 11:52:57 AM »
I have not scoured the AR yet. Does anyone know if the "ratchet" in the OMERS deal includes a deadline for an IPO? because
a) if not then the ratchet is somewhat irrelevant.
b) if so, and it is any time soon, then FIH are going to give away a lot of BIAL shares. Coronavirus and full IPO valuations are not compatible.

on the call they said next 3 years

Gopinath

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Re: Fairfax India new issue
« Reply #403 on: June 08, 2020, 08:19:06 AM »

Xerxes

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Re: Fairfax India new issue
« Reply #404 on: June 12, 2020, 12:51:13 PM »
Great read on your blog. Some comments about FIH as a whole:

- discount to BK although provides a margin of safety is not really relevant IMO, since it has the fees, it is in emerging market etc. it will always be there. Unless one is a strategic investor who has the ability to make changes on the company structure, the investment based on the discount spread isn't justified. Book value growth is the key.

On the airport
- haven't seen anyone that follows FIH to yet make a comment on this: unlike say the airport in Amsterdam that thrives from international flow through, the Bangalore airport has a huge domestic market. Is that a plus ? definitely it cannot be a negative.

On the overall structure
- FIH feels like a locked-in investment account that you cannot add money into it. i.e. FIH doesn't have a steady cash generator within to provide additional funds for future investment. I am not talking about paper earnings that of course is there. I feel that is something that is missing. That means future cash flow in for investment needs to be either via asset-sale or equity offering; both of them really bad option, if you want to be taking advantage of a distress market in a counter cycle move.

So I am thinking what stops, FIH to raise funds (ala Brookfield) with third-party investors; and deploy those funds and charge them management fees. This way FIH future potential can tilt from purely being an asset-appreciation vehicle to one that also collects actual cash in terms of management fee on top of being asset-appreciation vehicle while deploying a larger check (i.e. investment prowess).

Gopinath

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Re: Fairfax India new issue
« Reply #405 on: June 12, 2020, 01:22:45 PM »
Discount will be there may be a popular sentiment (otherwise it won't trade at a huge discount now), but how much is the question relative to their compensation? The current discount is too large, whichever way you want to capitalize that fee/incentives.

Out of 700 planes (both arrivals and departure) daily, ~100 of them are international. Its a small pie relative to the domestic, it collects more than 4 times average fee per passenger relative to the domestic customer. It will eventually grow both the customers and fee per customer over time as they are doubling the capacity in the terminal and runway.

They can bring in cash as they wish, plenty of ways to monetize these assets partially. They are in the process of splitting 'Fairchem'. They are considering taking the airport public when the valuation and opportunity makes sense. Although the profits are not streamlined up to the FIH, each business stands on their own cash profits and growing without needing support from FIH.

I would be surprised if they don't raise money from other investors and get paid somehow if they prefer that over time. Current possibilities seem difficult as both the discount in asset value vs assets in the holding company. It would be a stretch to think FIH will become an asset light fee generating entity with other people's capital in the near future.


Tompety03

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Re: Fairfax India new issue
« Reply #407 on: July 14, 2020, 07:28:43 PM »
Thanks for posting.  Hit the paywall - any details on the deal in the article? I guess we will find out when Q2 report is out in a couple weeks.

StubbleJumper

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Re: Fairfax India new issue
« Reply #408 on: July 15, 2020, 06:28:28 AM »
Thanks for posting.  Hit the paywall - any details on the deal in the article? I guess we will find out when Q2 report is out in a couple weeks.


We might not find out at Q2 either.  The article appears as if it covers OMERS requirement to mark down its investment in BIAL.  If OMERS does it, likely FIH will need to conduct an impairment assessment to evaluate whether the value of the airport is permanently impaired and ought to be marked down.  I am guessing that Fairfax would prefer to not take an impairment, and in fairness, for such a long-lived asset, it may be a bit pre-mature to decide that its value is permanently impaired.


S

Tompety03

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Re: Fairfax India new issue
« Reply #409 on: July 15, 2020, 07:11:59 AM »
Got it - the headline made it seem like they were buying more at a lower valuation and I assumed that would require a revision by Fairfax.

Chris