CA - East 72 Dynasty Trust - Fairfax Financial Holdings: BIAL And Its Massive Built-In Growth
2024-04-14 12:20:00 ET
Summary
- Bangalore International Airport Limited (BIAL) operates Kempegowda International Airport, which has a monopoly within a 150 km radius until 2033.
- BIAL has plans for significant expansion, including the construction of a second runway and two additional terminals, to increase passenger capacity to 90 million by 2037.
- Fairfax India Holdings, through its subsidiary Fairfax Financial Holdings, holds a 13% equity stake in BIAL, which is valued at $1.6 billion.
The following segment was excerpted from this fund letter.
Fairfax Financial Holdings ( FRFHF , FFH:CA )
Bangalore International Airport Limited (BIAL) - Monopolistic but Regulated High Margin Volume Growth, a New Expanding Airport, Bangalore
If you sat down to conceive of the perfect investment, how might it look? One interpretation would be that it has monopolistic attributes - the famous "only bridge into town." 17 But further, imagine your "unregulated" toll bridge was located in an area of rapid population growth of highly qualified people - an area of high-tech and IT manufacturing. So your toll bridge is going to get ever more used - so you can build a second one next to it. Moreover, you could essentially build your monopoly "bridges" from the ground up with few (if any) legacy issues, using the latest technology to service an industry which cannot function effectively without the latest know-how....
East 72 Dynasty Trust - Fairfax Financial Holdings: BIAL And Its Massive Built-In Growth