Fairfax India (FFH.U) — BIAL Catalysts & Outlook

Assessing Fairfax India’s airport monopoly in Bengaluru and the market’s mispricing.

It’s quite rare to find a proven investment team that’s quietly acquired a massive controlling stake in a monopoly you literally can’t avoid using.

Even better when that monopoly sits in one of the world’s fastest-growing economies, controls the primary gateway to its tech capital, and comes with a government-backed concession running until 2068.

But here’s the thing about beautiful setups—they usually trade at beautiful prices. Except when they don’t.

Right now, you can buy into a Canadian-listed holding company that’s spent eight years methodically building a controlling stake in one of India’s crown jewel infrastructure assets.

You’re getting this for roughly 80 cents on the dollar—essentially paying discount prices for what amounts to owning a toll road in the sky, complete with 40+ years of exclusive rights and cash flows that have tripled in two years.

It's a strategic investment vehicle run by people who've been investing in India since before it was cool. They control an airport posting record profits in India's Silicon Valley, where every major tech company from Infosys to Google has planted their flag.

The holding company gives you exposure to proven capital allocators who've compounded book value at over 9% annually since 2015, plus a collection of other quality Indian businesses.

The market's essentially offering you a backdoor into Indian infrastructure at private equity prices, complete with public market liquidity.

I’m sure some of you have already guessed it, but the company is Fairfax India Holdings Corporation—ticker FFH.U on the Toronto Stock Exchange.

Don't let the Canadian listing fool you—this is pure India exposure, managed by Prem Watsa's team, the same folks behind Fairfax Financial, the $40 billion insurance and investment conglomerate that's compounded wealth since 1985. Watsa, often called Canada's Warren Buffett (though he probably hates that comparison), has been investing in India for decades through both public and private vehicles.

Since going public in 2015 at $10 per share, Fairfax India has methodically built positions in high-quality Indian businesses.

They started with $1.1 billion in capital and have turned it into a portfolio worth $3.7 billion today. But none of their investments are bigger or more impactful than their 74% controlling stake in Bangalore International Airport (BIAL).

The BIAL story started in March 2017 when Fairfax India swooped in to buy 33% from the struggling GVK Group for $1.5 billion. Later that year, they'd acquired GVK's remaining shares, bringing their stake to 54%. Then, just this February, they closed on another 10% from Siemens for $255 million, taking their ownership to 74%.

In total, they've invested about $1 billion to control three-quarters of Bengaluru's only major airport.

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Bangalore International Airport Limited (BIAL)

Bangalore International Airport (officially Kempegowda International Airport, but let's stick with BIAL for simplicity) isn't just any airport. It's the sole air gateway to Bengaluru, a city of 13 million that generates roughly 4% of India's GDP.