Fairfax India starts preparatory work to list Anchorage at $1.3-billion valuation

Fairfax Financial Holdings Ltd, the Toronto, Ontario-based financial holding company owned by Indian born businessman V Prem Watsa, has started preparatory work to list Anchorage Infrastructure Investments Holdings Ltd (Anchorage) on the Indian stock exchanges, potentially valuing the company at $1.3 billion.

Fairfax hasn’t indicated a timeline for the planned initial public offering (IPO) in Anchorage, which was set up in 2019 as a wholly-owned unit of Fairfax India Holdings Corporation to act as its flagship investment vehicle for airports and other infrastructure investments in India.

In 2019, Fairfax India signed definitive agreements with OMERS (the pension plan for municipal employees in the province of Ontario, Canada) to transfer 43.6 per cent out of the 54 per cent that it owns in Bangalore International Airport Limited (BIAL) to Anchorage and OMERS to invest about $130 million to acquire from Fairfax India an 11.5 per cent interest on a fully diluted basis in Anchorage.

The transaction values 100 per cent of BIAL at $2.6 billion and will result in OMERS indirectly owning approximately 5 per cent of BIAL.

“We are awaiting one final approval from the Government of India and expect to close this transaction in March 2021,” Watsa, chairman of Fairfax India Holdings Corporation, told shareholders on March 5.

Fairfax India eventually plans to transfer all the shares it owns in BIAL to Anchorage.

“Fairfax India intends to complete an IPO of Anchorage that values the underlying shares for 100% of BIAL at a target valuation of $2.9 billion (a valuation of $1.3 billion for 100% of Anchorage),” Watsa told shareholders in a letter.

A “ratchet” mechanism has been agreed with OMERS whereby if the IPO is completed at a valuation below $1.3 billion, the investor will receive an incremental share of Anchorage to compensate for the difference between the actual IPO valuation and $1.3 billion, he stated.

‘High marketabiliy’

BIAL, Watsa said, is a profitable airport in India and is a highly sought-after asset.

“The marketability of BIAL to large pension funds and strategic global airport operators, even as an unlisted company, is very high. This is supported by several recent examples of stake sales and privatisation of airport assets in India. A public listing of Anchorage will help in discovering the true value of BIAL. We believe that it could be much higher than $2.9 billion,” he said.

Anchorage has been participating in privatisation auctions for Indian airports and railway station developments. “It continues to look for unique and value-accretive infrastructure and allied businesses. We have also started the preparation work to list Anchorage on the Indian stock exchanges,” he stated.

“We believe that listing some of the private companies that Fairfax India owns will result in better discovery of the true value of these companies,” he said.

Seven Islands Shipping in which Fairfax holds a 48.5 per cent stake has separately filed papers with SEBI for an IPO. Fairfax India has investments in ten companies (13 currently as one has split into four listed entities). This includes Bangalore International Airport, CSB Bank, Seven Islands Shipping Pvt Ltd, Saurashtra Freight, Sanmar Chemicals Group, Fairchem Organics, National Stock Exchange of India, IIFL Finance, IIFL Wealth and IIFL Securities.

As part of the real estate monetisation plans of 460 acres of land adjoining BIAL, Fairfax has finalised land leases for a 3D printing facility and a large central kitchen for the premier airline services company, as well as term sheets for a joint development ‘‘built to suit’’ campus for a multinational corporation and a trade centre.