Fund managers, page-1220

@Barooona
@geffa9

Hi,

I've done more work on Findi, following the announcement of a major new investor last week.

1/ Estimated value of TSI India
A new investor has invested in TSI India on the basis of a valuation of 153 m AUD now (and 190.6 m after receiving 37.6 m AUD in Compulsory Convertible Debenture).
I can validate this valuation based on 3 elements* :
- SBI contract valued at around 83 m AUD (on the basis of a simplistic DCF),
- CBI contract valued around 48 m AUD (based on the estimated cash flow until 2027),
- and a valuation of around 22 m AUD for Findi Pay (revenues of around 5 m AUD in FY 23).

2/ Estimated value of Findi
We do not know how much Fendi will own in TSI India after the conversion of the Compulsory Convertible Debenture, so I have estimated that all the existing shareholders will be diluted the same way, which means that Findi would own 75 % in TSI India after conversion (=90 % X (1-0.167)).
In that case, the estimated value of Findi would be 139 m AUD (= (75 % X 190.6) -6) or 2.52 $ / share**.
I have taken into account the value of Findi net debt, after conversion of options to expire in Jan 24 (will generate 16 m AUD of cash).

There was an interesting article in The Economist last week with the title "India's unusual IPO boom", which showed that there was also a high demand of investors for IPO now including in traditional sectors. So, TSI India's IPO will probably do not face major obstacle, in today's market conditions.

3/ Expected value of Findi market cap
Unfortunately, I think that Findi market cap will not fully reflect its sum of the parts.
As it is often the case, there will probably be a discount for the parent company (Findi) as 2 structures will be listed (Findi and TSI India).
It would not have happened if the new investor had invested in Findi directly.

Not easy to know what should be the discount between Findi market cap and its sum of the parts.
My experience is that usually this discount is between 20 % and 30 %.
This corresponds to a target valuation between 97 m and 111 M for Findi, or a share price range of 1.76 $ to 2.01 $.

* my own estimates
** reminder : recent broker study has a target price of 3.61 $, which looks to me really high. It seems to value other potential contracts (my valuation relies on existing contracts only).