Fairfax’s Anchorage Infra to list on Indian bourses

Set to invest $2.2 bn in Bengaluru airport to cater to 90 million passengers by 2034

Canadian Billionaire Prem Watsa’s Fairfax India is planning to list Anchorage Infrastructure, its flagship investment vehicle for airports and other infrastructure investments, in India.

Further, Fairfax-controlled Bangalore International Airport (BIAL) is set to invest around $2.2 billion to create infrastructure to manage 90 million passengers by 2034.

In a letter to shareholders, Watsa, who is chairman of Fairfax, said since its inception in June 2019, Anchorage has actively participated in bidding for Indian airports and railway stations.

“It continues to look for unique and value-accretive infrastructure and allied businesses. We have also started work to list Anchorage on the Indian stock exchanges,” said Watsa.

He added that in March 2021, Fairfax India expects to close a transaction whereby it will transfer 43.6 per cent of the 54 per cent it owns in BIAL to Anchorage.

It will sell 11.5 per cent stake in Anchorage for a cash consideration of $130 million.

The transaction values Bangalore Airport at $2.6 billion and will result in OMERS, the largest shareholder in Fairfax India Holdings, indirectly owning around five per cent in BIAL. Between March 2017 and May 2018, Fairfax India invested $653 million to acquire 54 per cent in BIAL.

BIAL’S expansion up to 2034 will be funded through internally-generated resources and debt. BIAL’S revenues dropped 79 per cent in the two quarters ending September 2020 to $23 million.

The management has undertaken several operational efficiencies, which will result in annualised savings of $10 million. Passenger traffic fell 60 per cent from the previous year (2019) to about 14 million and cargo handled dropped 17 per cent, primarily because of the reduced belly capacity.

Based on International Financial Reporting Standards (IFRS), BIAL’S revenue dropped by 58 per cent to $83.1 million, resulting in a loss after tax of $66.8 million in 2020 against a profit of $53.8 million in 2019.

Given Covid’s impact on the global travel industry, BIAL’S financial performance in 2020 did not come as a surprise, said Watsa.

“This is only temporary. We expect higher user fees in the third five-year control period, which will start in April 2021,” said Watsa. He expects BIAL to generate a total return on equity of 16.5 per cent for the second control period and 17.7 per cent for the combined first and second control periods.