Author Topic: Fairfax India new issue  (Read 179278 times)

TwoCitiesCapital

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Re: Fairfax India new issue
« Reply #310 on: December 02, 2019, 10:59:48 AM »



lessthaniv

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Re: Fairfax India new issue
« Reply #312 on: December 16, 2019, 08:31:07 AM »
Nice bump to book value today.

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Fairfax India Holdings Corp
Symbol   FIH
Shares Issued   122,631,481
Close 2019-12-13   U$ 11.97
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Fairfax India to sell 11.5% of Anchorage for $134M


2019-12-16 09:11 ET - News Release

Mr. John Varnell reports

FAIRFAX INDIA SELLS MINORITY POSITION OF ANCHORAGE INFRASTRUCTURE

Fairfax India Holdings Corp. has entered into an agreement to sell an interest in Anchorage Infrastructure Investments Holdings Ltd. of approximately 11.5 per cent on a fully diluted basis for gross proceeds of approximately 9.5 billion Indian rupees (approximately $134-million at current exchange rates). The interest in Anchorage will be sold by way of a private investment agreement. (Note: All dollar amounts in this news release are expressed in U.S. dollars, except as otherwise noted).

Anchorage is a subsidiary of Fairfax India and will be its flagship company for investing in companies, businesses and opportunities in the airport sector in India. Anchorage is also Fairfax India's platform for bidding on airport privatization projects in India. Currently, Fairfax India, through its wholly-owned subsidiary, FIH Mauritius Investments Ltd, owns a 54.0% interest in Bangalore International Airport ("BIAL"). As part of the transaction, Fairfax India will restructure its interest in BIAL such that a portion of such interest will be held through Anchorage and, following closing of the transaction, Fairfax India's effective ownership interest in BIAL will decrease to approximately 49.0% on a fully-diluted basis.

The transaction is subject to customary closing conditions, including various third-party consents, and is expected to close in the first half of 2020.

As a result of the transaction, Fairfax India will record investment gains of approximately $506 million (approximately INR 35.6 billion at current exchange rates) implying an increase in book value per share of approximately $3.30 per share. The investment gains are supported by positive operational developments at BIAL. For the 12-month period ending October 2019, total traffic at BIAL was approximately 33.7 million passengers. The second runway commenced operations in December 2019, making BIAL the first airport in India to operate independent parallel runways that enable aircraft to land or take-off simultaneously on both runways. In addition, the expansion project for a second terminal at BIAL is expected to be completed in 2021.

Fairfax India is an investment holding company whose objective is to achieve long-term capital appreciation, while preserving capital, by investing in public and private equity securities and debt instruments in India and Indian businesses or other businesses with customers, suppliers or business primarily conducted in, or dependent on, India.
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petec

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Re: Fairfax India new issue
« Reply #313 on: December 16, 2019, 10:22:24 AM »
By my maths that implies that 43.5% of Bial has been transferred to Anchorage and 10.5% remains at FIH. That sound right?

My thinking is that 5% of BIAL must equal 11.5% of Anchorage.
FFH MSFT BRK BAM ATCO LNG IHG TFG CGT DC/A

Lakesider

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Re: Fairfax India new issue
« Reply #314 on: December 16, 2019, 05:45:32 PM »
So they sold BIAL to themselves and realised a $3 gain?  ::)

Viking

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Re: Fairfax India new issue
« Reply #315 on: December 16, 2019, 07:03:30 PM »
I am not sure who the buyer is. “The interest in Anchorage will be sold by way of a private investment agreement.”

My guess is the problem with private investments like BIAL is coming up with a proper valuation. If they sold a portion of BiAL to an outside investor this would perhaps give then an opportunity to update their internal valuation.

petec

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Re: Fairfax India new issue
« Reply #316 on: December 16, 2019, 11:48:07 PM »
I am not sure who the buyer is. “The interest in Anchorage will be sold by way of a private investment agreement.”

My guess is the problem with private investments like BIAL is coming up with a proper valuation. If they sold a portion of BiAL to an outside investor this would perhaps give then an opportunity to update their internal valuation.

Agreed. In an ideal world (given the stated intent to bid on other airports) the investor is an established airport operator, but if that was the case I imagine both sides would want that fact publicised.
FFH MSFT BRK BAM ATCO LNG IHG TFG CGT DC/A

TwoCitiesCapital

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Re: Fairfax India new issue
« Reply #317 on: December 17, 2019, 09:10:55 AM »
Crazy that this transaction has resulted in the massive pop over the last two days.

Same BIAL that it's always been, but the accounting change allows them to bump up the book value and start charging fees now that book value is above high water mark. If anything, shareholders are WORSE off after the transaction with regard to fees, but that didn't stop the price from ripping 10%.

hobbit

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Re: Fairfax India new issue
« Reply #318 on: December 17, 2019, 09:26:40 AM »
Crazy that this transaction has resulted in the massive pop over the last two days.

Same BIAL that it's always been, but the accounting change allows them to bump up the book value and start charging fees now that book value is above high water mark. If anything, shareholders are WORSE off after the transaction with regard to fees, but that didn't stop the price from ripping 10%.

if you compare BIAL with other publiclty traded airports around the world , it still seems quite a bit undervalued even more so with a second terminal coming up soon.

TwoCitiesCapital

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Re: Fairfax India new issue
« Reply #319 on: December 17, 2019, 09:35:52 AM »
Crazy that this transaction has resulted in the massive pop over the last two days.

Same BIAL that it's always been, but the accounting change allows them to bump up the book value and start charging fees now that book value is above high water mark. If anything, shareholders are WORSE off after the transaction with regard to fees, but that didn't stop the price from ripping 10%.

if you compare BIAL with other publiclty traded airports around the world , it still seems quite a bit undervalued even more so with a second terminal coming up soon.

Absolutely agree. That is, in part, why I was a buyer at $13, and $12, and $11. All I'm saying is this transaction is just an accounting entry - it's the same BIAL it was 2-days ago, but the shares are 10% higher and Fairfax can now charge fees again as this pushes NAV substantially higher.

I get why Fairfax did it. I just don't understand why this would pop the stock or why the people buying it today weren't aware of the value of BIAL two days ago.