For those who have a buy/hold on FDV what's the investment case NOW?
Reading through the II articles (those > 1 year are accessible for free) this is what I gather:
1. Zameen is the jewel of the crown and the 30% ownership valuation is worth more than the FDV market cap (valued at 1bn at some point)
Even II is now valuing Zameen at zero.
EMPG who owns the other 70% and raised $200M US to prepare for IPO haven't expressed interest in acquiring the remaining 30%.
If it is such a great asset why would they not pounce on it with the weak AUD and FDV desperate for cash (prior to cap raise)?
They understand Zameen potential better than anyone. But if anything the owners are getting rid of it (via IPO).
2. FDV or its businesses might eventually be taken over by OLX
I'm seeing the opposite with Prosus selling its OLX Autos division, laying off staff and shutting down their Frontier Car Group.
Their interest in frontier market is waning.
At FDV current valuation if they were interested they would have made a move already.
3. FDV turns network effect website into cash cows by taking a clip of the transaction.
From II article: "Propzy, the market leader in Vietnam and one of FDV's investments, has forsaken advertising revenue for 100% reliance on clipping the ticket on property transactions."
FDV got lucky selling Propzy in Feb 20 right before covid and made a profit.
Propzy closed 30 months later due to their inability to raise funding... Common story it seems.
"Clipping the ticket on property transactions" did not translate into profits and no one took over the business. They had to shut it down.
4. FDV is about to enter the ASX300
Maybe if they raise another $500M....
5. Zameen is worthless now but don't worry LATAM is the new Zameen!
"When the facts change I change my mind." does not apply to Nathan Bell who is in too deep both financially and reputationally.
He even refuses another analyst having a look in case he reaches a different conclusion. A red flag for me.
When the US sneeze, South America gets a cold. With a recession looming in the US you can expect strong negative economic impact in countries where the LATAM businesses operate. If LATAM fails I'm sure MENA will become the new Zameen...
If these businesses had so much potential why has no one made an offer yet?
Many overseas Private Equity firms have recently taken advantage of the weak AUD and low valuation to bid for Aussie tech companies (Readytech, Nitro, IntelliHR, Cellnet...). But no one has shown interest for LATAM or any of FDV ventures pushing management to raise capital at ~1/3 of the last cap raise.
There is a very prescient comment in the first article from 3 years ago when Nathan lays the investment case:
"Peter Lynch used to say some of the most dangerous words in markets are that stock Y is destined 'to be the next X'."
"My suspicion will be that most of those 'lottery tickets' you mention will probably more likely just end up being perpetual cash drains for many years to come. Eventually the markets will consolidate down and winners will emerge though, but probably a lot of money will be lost before that point arrives."
(20min delay)