Helios Fairfax Partners Corporation (FFXXF) Earnings Call Transcript & Summary

Good afternoon, and welcome to Helios Fairfax Partners Annual and Special Shareholders Meeting. I'm Ken Costa, Chairman of Helios Fairfax Partners and I will act as Chairman of this meeting. We'd like to welcome our shareholders and the other guests in attendance today. And I'd also like to welcome our co-CEOs, Temitopé Lawani and Babatunde Soyoye. We are holding this annual and special shareholders meeting in a hybrid, live and virtual format, in the light of the continuing COVID-19 pandemic. Our main objectives are to ensure that everybody stays safe, and that all shareholders have the same opportunities to participate and vote regardless of their geographic location. We'll now proceed with the formal portion of today's meeting. I should ask Julia Gray, our Corporate Secretary, to act as Secretary of the meeting. Thank you. I shall also appoint Shirley Tom and Amanda Castellano of Computershare Trust Company of Canada to act as scrutineers and to compute the votes of any polls taken at the meeting and to report thereon to me as Chairman. I can report that as a result of reviewing an affidavit of mailing and a preliminary report of the scrutineers, I'm satisfied that notice of this meeting has been duly given, that a quorum is present and that this meeting is, therefore, properly called and constituted. For those joining us virtually, instructions on how to ask questions and the voting procedure will appear on your screens. As with any new technology, unexpected glitches may occur, but our service providers for this platform at Lumi are very experienced at running this type of meeting and will help us out. Many shareholders submitted their votes before the meeting. Thank you. If you've already voted in advance of the meeting, and you do not wish to change your vote, no further action is required. If you are not a registered shareholder or a proxy holder and have joined us as a guest, you will not be able to vote, but you will be able to submit questions during the Q&A session. We will conduct the votes on the matters before us by a show of hands in-person or by voting online. We will be concluding on the motions at the end of the meeting once we've been through all the agenda items. The online voting will now be opened for all resolutions at this time. I announced that the minutes of the previous Annual Shareholders Meeting held on April 4, 2021, are available for inspection upon request to our Corporate Secretary. As well, I now formally place before the meeting, the annual report of the corporation for the year ended December 31, 2021, which includes the corporation's financial statements for the fiscal years ended December 31, 2021 and 2020, and the report of the auditor, PricewaterhouseCoopers LLP on the 2021 statements. I will now move directly to the election of directors and invite a nomination for directors.

I'm Belinda Blades, and I nominate directors of the corporation for the ensuing year: Kofi Adjepong-Boateng, Ken Costa, General Romeo Dallaire, Christopher Hodgson, Tope Lawani, Quinn McLean, Sahar Nasr, Babatunde Soyoye and Masai Ujiri.

I second the motion.

Thank you. As no other nominations for directors have been received and as the number of directors nominated is exactly the number to be elected, I confirm that those 9 nominees are proposed for election as directors of the company. Those in favor, please indicate. Thank you. Any withheld? Thank you. I now invite a resolution regarding the appointment of an auditor.

I move that PricewaterhouseCoopers LLP be appointed as auditor of the corporation to hold office until the next annual meeting.

I second the motion.

Those in favor to indicate. Any withheld? None. Thank you. The next item of business is to consider the LTIP resolution in respect to the adoption of the corporation's long-term incentive plan, which is attached as Appendix B to the information circular and the issuance of awards thereunder and related matters is more fully described in the information circular and the LTIP resolution. The LTIP resolution is set out in Appendix A to the information circular.

I move that the LTIP resolution be approved.

I second the motion.

Those in favor? Any against? Motion is carried. Thank you. If you've not already voted online, please complete the online ballot. We will give you 1 minute to do so. Just ask for your forbearance in the room as those that are joining us virtually fulfill their tasks.

Mr. Chairman, the online voting is now complete, and the polls are closed.

Thank you. I've been advised by the scrutineer that the ballots and proxies deposited for the meeting have now been voted. The scrutineer has provided its preliminary report of voting. I can confirm that each of the nominated directors has been appointed as directors of the corporation to hold office until the next annual meeting. I'd also like to take the opportunity to welcome our new directors. Kofi Adjepong-Boateng, Kofi, do you want to stand and give people a sight of you? Sahar Nasr and Masai Ujiri. Thank you. And I'd also like to thank our retiring directors for their dedicated service to the company, Richard Okello, Ndidi Nwuneli and Mike Wilkerson. In addition, I confirm that PricewaterhouseCoopers LLP has been appointed as auditor of the corporation to hold office until the next annual meeting and that the long-term incentive plan has been ratified and approved by shareholders. We will file a report on SEDAR, setting out the voting results following the meeting. I now invite a motion for termination.

I move that this meeting be terminated.

I second the motion.

I declare that the meeting is terminated. And I'd like to invite Tope and Baba, our co-CEOs to provide a presentation on Helios Fairfax Partners and that will be followed by an opportunity for questions.

Thank you, Ken. You know, Baba and I are very delighted to be here in Toronto and particularly delighted to see so many of you here in-person. Clearly, we'd anticipated that many people who would have liked to attend would not have able to do so in-person. So we did a prerecorded presentation, which we will do now. And then after that, we'd be very pleased to take your questions. Hello, everyone, and a very warm welcome to you all. Since at the time of recording this, we're still not sure whether we'll have an opportunity to see many of you in-person. I can only say that I hope that's proven to be the case. And whether we do get to meet in-person or not, I hope that you and your families are keeping safe and well. In my presentation today, I would like to share with you the reasons that we believe that on a long-term view, Africa is the most exciting place to be investing. I will also share with you, as we did in our recently published annual reports, our strategy for creating shareholder value out of the opportunities that the market presents and the capability of our subadvisor, Helios. Even though interest rates are rising across the world, on any kind of long view, we're still living in a low growth, low interest rate, low return environment. And there are many powerful forces at work that seem likely to keep things that way for some time to come. So you might be asking yourself where growth might come from in such an environment. Well, in the immortal words of a Canadian legend, "Skate to where the puck is going, not where it's been." We believe Africa is where the puck is going. Historically, the great waves of wealth creation and economic growth have come from innovation, whether it's the advent of the railroads in the 19th century, the great strides in aviation after the second world war or today's revolution in digital technology and computing. Innovation has always driven step function increases in economic growth. Today's revolution in digital technology and computing is being driven by the availability of cheaper and better tools. If you started today on like, say, 10 years ago, you don't need to buy expensive shrink-wrap software when SaaS models allow you to use that software on a pay-as-you-go basis with free upgrades thrown in. You don't need a big air-conditioned server room when Amazon Web Services will sell you storage and cloud computing for a few dollars a month. Even to advertise, you no longer need to buy high fixed cost billboard, radio or TV ads when pay-per-click can be so effective. All of these tools are making the process of innovation, a lot more democratic. So slowly and sometimes imperceptibly, technology is radically transforming our daily lives. Look at music, for instance, 10 years ago, which is not a long time in the grand scheme of things, the old compact disc was 90% of industry sales. Now streaming is 95% of the market, and the CD is basically dead. And that just happened on the cover of darkness. Whether it's in entertainment or in our easing habits or even in health and fitness, technology is dramatically changing our lives in important, but somewhat invisible ways. So what do you need in order to drive innovation? They are basically 3 ingredients, a youthful, tech savvy, urban population. This is what drives innovation, and innovation drives growth. So a youthful tech-savvy urban population is the key to future economic growth. Let's talk about urbanization first. Innovators have always been urban and with good reason. Cities present the best and the worst of the human condition. The greatest human challenges are found in cities and the need to solve them is most acute in cities. And of course, the resources to solve these problems are in close proximity to have different people with different ideas, creating opportunities by solving lives problems. So innovations are urban. They're also young and getting younger. When you look at the age distribution of patent recipients in the U.S. between 1995 and 2005, the most common age of which they received their first patent was 31. That's pretty young. But fast forward only a few years to the period between 2006 and 2016, and that age group down to 27, and the shape of the curve has narrowed and moved to the left. So innovators are young and they're getting younger. So if youthfulness is growth, then Europe and North America will face some severe headwinds. All of the indicators of labor productivity and consumption are in sharp decline, again, on any kind of long-term view. This data comes from a European thing tank and it's pretty technical. And so the numbers themselves really don't mean too much because the shape of the line tells you all that you need to know. Africa, on the other hand, is the youngest. It will remain youthful as the rest of the world ages. When you look at the demographic pyramid, it's very much a pyramid, while the rest of the world is more rectangular and older. So fast forward to 2050 and the picture becomes even more stock. By then, fully 20% of the population of the rest of the world will be over the age of 65, very top heavy. In Africa, that number will still be just over 5%. The implication of this is that over the next 30 years, almost 70% of the total increase in the global working population will come from Africa. I find that just an incredible statistic and you probably do, too. The implications are really profound. So not only is Africa young and remaining young, it's also urbanizing the fastest. Over the same 30-year period we just discussed, Africa's urban population will grow by 175%, far faster than those of any other region in the world. And this rapid urbanization is not concentrated in just a couple of countries or a few megacities. Instead, you have growth in a large number of cities, well distributed across the continent, cities like Addis Ababa and Ethiopia, Luanda in Angola, Casablanca in Morocco, for example. It's not just Lagos, Cairo and Kinshasa, that have been very large for a long time. So what we have now in Africa is a youthful, urban, tech savvy population. They have the same kinds of attitudes as their age cohorts here in Canada, for example. And you look at the court from the young professional on the left, there's no reason that she wants to spend her days in a shopping mall or worse yet in a bank, should much rather spend it with her family, should much rather spend it going to art exhibits and doing other things that are more rewarding. And when you look at their behaviors, they actually benchmark very well against their cohorts from other highly connected emerging markets like China. So in Nigerian and South Africa, for example, 60% to 70% of millennials shop for deals online. Higher numbers in that habitually make payments through mobile apps. They use YouTube tutorials to educate themselves and to gain skills. And in all of these metrics, they're just not that far off from their Chinese counterparts who are represented by the orange lines on the chart on the right. So this is ready-now population. They're highly connected and tech-savvy. So we have a continent of so-called digital natives. Tens of millions of young people born into a digital age, fully immersed in technology and seeing, in many cases, as entrepreneurs, ways of creating value by leveraging technology to address daily needs. It's been said that this could be a turning point for Africa, and we really do believe that it is. This critical mass of digital native is giving rise to a proliferation of tech innovation ecosystems. From 2012 to 2019, the number of such tech hubs in Africa grew from about 70 to more than 600. That's a 9-fold increase. And this is being recognized by the largest players in tech globally. Microsoft and Google and others are making significant investments on the continents that are aimed at harnessing the development talent that exists in Africa. So in answer to the question of where will we find attractive long-term sustainable growth in a low growth world, the answer is that we will find it where innovation will thrive, and this is in Africa. But what does that mean about specific investable opportunities? Well, innovation creates value where there's inefficiency and there might be no better example of this than e-mail versus traditional mail. The e-mail cost something like 1:100th of the price of traditional mail. It gets there instantly as opposed to a week later. And it can be sent simultaneously to anyone who's connected to the Internet instead of 1 recipient at a time. It's better in every way. And so, once the Internet started to take hold, the number of pieces of traditional mail sent annually in the U.S. began to fall precipitously. It's now fallen by almost 50%. So we're now around 50 billion pieces per annum now. By contrast, it's estimated that 100 trillion pieces of e-mail are sent out annually and that number is rising. So innovation targets inefficiency and it creates value all around. In Africa, there's no shortage of inefficiency. There's no shortage of sectors that are ripe for disruption. We see it in financial services, in logistics and distribution, just to name a few. That crowd that you see in the top left is queuing up to withdraw cash from an ATM. Just imagine how long it will take the poor guy in red to get to the front. And who knows whether there'll be cash left in the machine when he gets there or whether the machine has jammed. So what a way to spend your day. In the middle is a short of the traffic in and out of the Port of Apapa in Lagos. I can't tell you how many flights out of Lagos I've missed sitting in that very traffic. And on the right, from my standpoint, is what is probably the saddest evolve, a mound of perfectly fine farm produce rotting by the road side simply because the farmer couldn't get the goods to market in time. Solving these problems creates significant economic value. It also creates significant positive and social and economic impact aligned to the U.N. SDGs and to our own impact themes, whether it's driving financial inclusion, building more sustainable cities and communities or improving farmer incomes and alleviating rural policy. Let's look at some of these examples in more detail, take financial services. The recent study in Uganda looked at the attractiveness of putting your money into a basic bank account. They compare the cost of maintaining that basic bank account with the interest that you would earn on your money in the account. And what they found was that for more than 80% of the unbanked population, they didn't have enough savings to be able to earn enough interest to cover the cost of the account. So for 80% of those who are not in the banking system, putting money in a bank account was a money loser. So why would they do that? It's hard to see how traditional banks could ever penetrate that on bank population. Banks are just too expensive. Banks are also inconvenient. The same study found that 48%, so almost half of those surveyed stayed away from banks because the branches were too far away, but it was too difficult to access their money when they needed it. So the banks are expensive and they're inconvenient. So unsurprisingly, fintech innovators are responding to that inefficiency and inconvenience by disrupting and disintermediating banks in a number of ways. A few of these disruptors are actually Helios fund portfolio companies. On the payment side, Thunes is a Fund IV company, while Fawry and Crown Agents are both in Fund III. On the Connector APIs, you see [ TPA ], which is also a Helios Fund-III company. So this is an area rich with opportunity that we're tapping already. So there are 2 other areas that are ripe for disruption, logistics and distribution, both of which I mentioned a couple of minutes ago. On the logistics side, fully 2/3 of the 30 least efficient ports in the world are in Africa. So that obviously has cost implications. And distribution is one that I find particularly painful. The problem of waste is a global problem. It's not just an Africa one, but Africa is a special case. Take North America in the middle column on the chart on the right. 52% of all farm produce is wasted. But almost 20% of that 52% happens at the consumption stage. People buy food and end up throwing it away. In Africa, on the other hand, the far right column, about the same proportion of food that's grown is ultimately wasted in total. But we don't throw food away in Africa. Only 3% is lost at the consumption stage. The crisis is actually in the value chain itself. Of the 51% of food that is wasted, 38% of that is lost getting it from the field to the consumer. Imagine having to grow, as a farmer, 5 oranges in order to sell 3. This is a major tax on farmer incomes. The reasons for this are many, but it's basically a combination of a lack of storage at farm sites, fragmented and poorly connected transport systems and the absence of a cold chain. These are problems that technology can help fix. And innovations are now focusing on it. Companies like Kobo360, Trella, Trade Depot, Max, companies that we know very well, are digitizing different parts of the system in order to squeeze the maximum efficiency from the physical assets that already exist. All of this innovation has the power to transform not only the sectors that it targets directly but also the economy as a whole. But there is one innovation that has the potential to be the most transformative of all and that's cryptocurrencies. When you mention cryptocurrencies probably here in Toronto or in New York or in London, everyone thinks you're talking about the price of bitcoin. Well, that is definitely not what this is. When you live in a country where FX devaluation eats away at your savings, where exchange controls add friction to trading across borders, where large proportions of the population are excluded from the financial system, and where the financial system itself is susceptible to manipulation for political objectives, cryptocurrencies can literally be a silver bullet. So it's no surprise that when you look across the world at the incidence of crypto ownership, African countries like Kenya, South Africa, Nigeria, rank in the top 10 with a bunch of other African countries like Zimbabwe not far behind. And when you're just to include only the online population, which is those who have the access and probably the know-how, a country like Nigeria is just miles ahead of every other place. So imagine from an investment standpoint, a world in which we could be investing in Africa with all of its demographic tailwinds, but doing so without any of the headwinds associated with the financial system. In my view, at least, the results could be quite spectacular. So this is one to watch it. We're watching it closely. So in HFP, we believe that we're very well positioned to capitalize on these new Africa opportunities. We have the expertise, both sectoral and geographic expertise. We have the network and connectivity across the continent's key markets, connectivity to entrepreneurs, management teams, corporates and regulators. And we have the creativity to design deals that address the needs of all constituencies, not just us, but all constituencies. So we believe that we're very well placed to capitalize on these opportunities. And by the way, the sectors that we're focused on are very well aligned to these long-term uninterruptible megatrends. Demographics and urbanization, technology and innovation will drive positive developments in digital infrastructure, so things like data centers, towers and fiber; financial services and financial technology, which we spoke about, tech-enabled business services that are digitizing areas such as distribution and logistics, as we discussed; and in consumer nondiscretionary, comprising food, beverage, personal care, health care and education and also clean energy and power. What's also interesting is the also identified within these sectors, companies that align well with our investment selection criteria. So we believe that our sector focus and our investment selection criteria are right in line with the long-term megatrends in Africa. So my response to the question of where to find growth and absolute returns in a low interest rate, low growth world is that you find it by aligning yourself to the powerful demographic and innovation tailwinds that we are seeing in Africa. Skate to where the puck is going, not where it's been. I hope by now you have a good understanding of why we believe so strongly in the investment prospects for Africa. But what is HFPs strategy for creating shareholder values from these opportunities? For those of you who've had a chance to read our recently published annual report, this will be familiar, but I believe it's well worth recapping. As you know, TopCo LP, that's the entity that's entitled to receive excess management fees and a share of carried interest from the Helios funds, is our single largest investment. It represents about 42% of our common shareholders' equity. Its value is driven by the growth and performance of Helios' third-party asset management business. And from HFP standpoint, it's relatively capital-light, capital-light in the sense that the bulk of the earnings comes from investing capital that belongs to third parties, not HFP. So growth in TopCo is accretive to HFPs ROE. So we should rightfully be focused on investing to maximize the value of TopCo LP. A good example of how we might do this would be to invest in new Helios fund strategies in advance of Helios raising third-party capital into them. This will give us exposure to the opportunities presented by the strategy itself, but also have the potential additional benefit of capitalizing third-party capital to come in. So we get the double benefit of a good return on our balance sheet capital and an increase in the value of TopCo LP to the extent that we're able to increase the fee and share of carried income. Aside from that, we'll also be investing balance sheet capital in direct deals originating out of Helios' strategies. So for example, we recently co-invested in [ Tron Holdings ], a Helios Fund IV investment in Morocco's leading distributor of medical equipment and technology. Doing so exposes our balance sheet capital to the best ideas the Helios team generates. And it also has the healthy effect of further aligning our interest with those of the third-party investors in Helios funds. I'd like to discuss one example of an opportunity that has the potential to drive real value, and that's venture capital. In line with the overall Africa thesis I outlined earlier, we see a significant opportunity to invest in early-stage high-growth technology businesses that are disrupting key sectors of the African economy. The opportunity appears to be most interesting in the so-called Series A and B growth stages where companies are past the riskiest seed stage but not yet mature enough for a private equity investment. Investing our own capital in such businesses and through Helios finding ways to harness third-party capital to add to our capital could create significant value. And we believe Helios is well placed to make this work, given they're on the ground network, their portfolio operations team that can provide the right kind of support to these companies and their ability to continue to provide financial support out of their private equity funds to the companies that grow beyond the venture stage and need and deserve that additional support. There has, in fact, been a clear acceleration of funding going to the venture space in Africa, almost $9 billion in the 5 years between 2016 and 2021. The biggest portion of that, more than $5 billion has gone into Fintech, a number that's approximately 87x the amount that went in, in the 5-year period before that. But significant amounts of capital have also gone into other areas such as logistics, energy access, e-health and education. But despite this rapid growth, the market is still significantly underserved. On a per capita basis, Africa has received $6 of venture capital funding over the last 5 years. That's less than 1/7 of Latin America's and only 1/10 of India's. We believe that the Africa opportunities every bit is exciting. So there's no reason that, that gap should be as large as it is. The funding gap is most acute at the Series A and B stage, as I mentioned earlier, where companies are raising more than C stage amounts, but are still too immature for private equity type of amounts. So comparing the 2019 to 2021 period with the 2016 to 2018 period, for the earliest stage investments, we saw an increase in the number of funding rounds going from 80 to 418. That's an increase of about 5x. However, the rate of growth in Series A or B rounds was quite a bit lower. We saw barely a doubling. So what that suggests to us is that it probably means there is an increasing backlog of companies that are growing, needing ever larger amounts of capital but struggling to find it. So we think that's a sweet spot. So this is an initiative that we're evaluating, and we'll let you know as that develops. But it's just one example of the range of opportunities that we see and are continually developing in order to ensure that we're investing your capital in a manner that maximizes its own return but also has the potential to enhance the value of TopCo LP. HFP structures in many ways the perfect machine for harnessing the raw energy of the African growth opportunity and converting it into shareholder value in a sustainable and continually reinforcing way. Over time, as has happened elsewhere in the world, African economic growth should result in increased global capital inflows, falling discount rates, deepening capital markets and increasing domestic return on capital. The increase in return on capital should enable the Helios funds to generate stronger returns and achieve stronger AUM growth, which in turn would increase the fee and carry income and profitability of those funds. That will flow to HFP in the form of increased value at TopCo; higher excess management fees and carried interest; greater balance sheet capacity to deploy into new strategies, whether organically or by acquisition; and rising ROE as the ratio of third party to balance sheet AUM grows. And for you, our shareholders, the ultimate reward will come in the form of return of capital via dividends and additionally in the form of share price appreciation. This combination of strategy and structure is extremely powerful. Of course, execution is the key, and that is what we wake up every day focused on. So that concludes my presentation today. Thank you very much for listening. And of course, thank you very much for your continued support. Next on our agenda will be a presentation from my partner, Baba, who will give you greater insight into our subadvisor, Helios. Given the significant role played by the Helios team, we thought you would benefit from learning more about them. Baba will also give you an update on the performance of the existing portfolio, both the legacy portfolio, but also the investments we've made more recently. So thank you again, and I look forward to seeing you soon.

Thank you very much, Tope. Good afternoon, everyone, and welcome from our studios in London. I'm now going to spend the next session presenting the organization and people responsible for managing and driving returns on the HFP assets as well as provide you with the key highlights on our progress since our appointment in December of 2020. I will start by introducing the subadvisor. The subadvisor, Helios was founded roughly 18 years ago by Tope and myself, who happen to both be Nigerians and met while working at Texas Pacific Group. Our vision from the very beginning was to create a truly world-class African investment organization. This, from our perspective, required building organization that was present in the centers of business for Africa, both within and outside Africa as well as creating an organization run by people from the continent with best-in-class global education and exposure as well as relevant work experience. Starting -- going back to beginning. On taking of our management of HFP, we mainly set off on 2 things. The first was to work on strategy, which you've heard about from Tope. At the same time, we actually worked quite seriously to streamline the organization and align the Fairfax Africa organization that we inherited with the strategy we want to execute upon. All that is now largely completed. The team at Helios are responsible for managing the balance sheet of HFP, maximizing value from existing investments, making new investments to maximize profitable growth and also to align everyone with together with HFP, there's broad equity participation across Helios. The leaders at Helios shown on this page are responsible for managing the existing portfolio as well as finding new investments. We have worked together for a very long time and everyone is empowered in their respective areas of responsibility. Our organization is small. We work in agile teams which we put together for specific targeted opportunities and our culture is entrepreneurial. We see a number of similarities with the culture of Fairfax, which is also very agile. Ogbemi, Nimit and Zineb who are on the slides there, along with Tope and myself, collectively lead the effort of finding investments, evaluating them, driving the strategy of value creation from the businesses we invest in. They all also happened to actually have origins across the continent, West, East and North Africa, respectively, and have all worked for some of the world's best organizations prior to joining us at Helios. Nitin on the top right here, run development and restructuring for one of the leading multi-national, multi-industrial conglomerates, and also happens to lead our effort to support companies in executing their strategy. So basically repeating what did he did at Tomkins across our portfolio and Helios. Henry Obi has been with us the longest, almost since the first year, rose our investment process and is also Chair of our Investment Committee. We currently have a total of roughly 40 people, mainly professionals. The support staff are not included in this. And nearly half of the professional staff are deployed in the investment team. The investment team works hard hand-in-hand with the professionals and the operations group, driving value creation by supporting and pushing the management teams of the portfolio companies we invest in. Our team is a balance of experienced hands and youth, and we have over 22 nationalities with audience across all the regions in Africa as well as regions in -- out of Africa that are quite important to African investments. We also have a very gender diverse organization and are one of the most gender diverse globally. Since the creation of Helios, we have always operated to the highest ESG standards. We had IFC with us from the beginning, and IFC for those of you that don't know is a commercial arm of the World Bank, and the standards on ESG are quite exacting and I'm glad to say that we've actually met and kept and satisfied their standards since the very beginning of Helios. In addition, Helios is a signatory to the U.N. SDGs and TCFD amongst others, and is one of a tiny handful of firms that successfully qualified as B corp. at the first time of asking. We invest in and do all of these things because we think it's very important and also the responsible thing to do. But at the same time, I've seen through experience that investments in these activities is actually a positive on enhancing financial returns of our portfolio companies. We have a number of ongoing initiatives across the following areas highlighted here on this slide, which I will now touch on. On climate change, we have stepped up our efforts quite dramatically in the last year and some key highlights include undertaking a greenhouse gas baseline across 10 companies across the portfolio. We have also acquired a climate change evolution tool for early-stage potential and investments, as well as undertaking detailed climate risk analysis across the portfolio. Moving on to diversity and inclusion. As I mentioned earlier, Helios is one of the most ethnically and gender diverse professional investment advisers. HFP is also very ethnically and gender diverse. However, though the HFP Board has strong ethnic diversity with 5 of 9 Board Directors, we know there is more to do on strengthening gender diversity at the Board. We are also working on strengthening diversity across our entire portfolio by tracking and collecting total gender diversity, board -- across the board of our portfolio companies, look at our gender pay gap and actually adopted other metrics for companies on an annual basis. We're also looking at establishing a Board-diverse targets for all of our new companies going forward. Moving on to ESG management. We are invested in being able to benchmark and compare our companies against others globally. To this end, we searched for and introduced a tool called EcoVadis into our ESG assurance process this year. EcoVadis is one of the world's largest providers of business sustainability ratings with over 85,000 companies in the database. We've also actually agreed on an ESG-linked capital call facility our latest fund. And the targets for actually that facility are linked with the performance of the portfolio companies of the EcoVadis tool. The impact is on the core of what we do at Helios. For us, it's about making a difference to people's lives across Africa. To actually keep track of things, we collect, collate and monitor statistics of impact through from various sources across the portfolio. Now to bring this all to life, we're going to show a video on impact. It sets of our view of Helios of what impact is for us as well as highlight some examples across the portfolio, while at the same time, introduce some other members of the Helios team to you. Hope you enjoy the video. [Presentation]

Welcome back, everyone. Hope that short video gave you a very good insight into actually how we think about impact through the lens of all the investments that we make. The companies we invest in have a real meaning and actually really transform the lives and livelihoods of people across Africa, while actually, at the same time, delivering really strong financial returns. We have 3 legs to our strategy for HFP. Firstly, margin assets on the balance sheet, which we took over, which we call legacy assets. Our approach with this are to maximize liquidity from them, and I'm going to that in more detail in the next few slides. Secondly, it's about driving value creation for HFP through our TopCo assets and investments, which are nearly 45% of value, is the single most important asset and our strategy is for this to be the engine of value growth for HFP. Tope has discussed in detail what we plan to do here, so I will not repeat it. And I will discuss the final leg of the strategy, which is about making other investments, which are predominantly directly or/and indirectly with HFP TopCo. Now I will go through each of the buckets in a little more detail, starting with legacy assets. In the few years prior to our appointment, the legacy assets reduced roughly by 20% per annum. Since our appointment, we have managed to stabilize the portfolio through a combination of senior management changes at the various companies and as well as strategic changes in line with the change in personnel. We have also restructured balance sheet across many companies, which have been quite critical to actually stabilizing the portfolio. In addition, perhaps more importantly, the legacy assets have substantial data protection in the form of guarantees, insurance and the fact that actually those that are not guided on insurance have actually security in the form of pledged assets. In short, nearly 3/4 of legacy assets are protected and cannot drop anymore. If we clear the public portfolio investments, the figure actually moves from 75% to nearly 80%. Our focus over the past year has shifted from stabilizing the assets to liquidity and the time frame from actually realizing liquidity from these assets coincides with the short period, which ends at March of 2024. We are also more actively managing the existing portfolio of public investments. And I will now move on from the past, our legacy assets to the future, starting with the key driver of value going forward, which is HFP TopCo. Growth for HFP TopCo is through realizing carry from existing funds, raising successful funds for existing strategies as well as launching new fund strategies. To this end, Helios has announced the full and partial exits of 4 companies across 2 funds since the last AGM. To continue to grow HFP, we also continually evaluate new investment strategies with a focus on strategies that leverage on our existing capabilities and networks and are highly synergistic with what we do and are intrinsically attractive to investors. Among these are venture capital and climate. You've had about venture from TopCo earlier today, so I would love to say a few words on climate. The climate initiative is aimed at a combination of 3 things: firstly, decoupling Africa's economic growth from greenhouse gas emissions. Secondly, leveraging Africa's natural resources to contribute to net zero globally, notably green hydrogen, natural carbon sequestration and Africa's minerals required for building the new sustainable infrastructure globally. The strategy is focused on trying to help the rural Africa population adapt to the worst ravages of climate change. Now moving on to talk about new investments, and these are predominantly invested in third-party funds that are managed by your investor adviser, Helios. The list of companies today includes Tron Holdings and NBA Africa. And there's also a commitment to the Helios Fund IV, which is the current flagship of fund of Helios the fund manager. Putting it all together, the book value of our assets are over $5.25 per share today, and we have sufficient available liquidity to continue managing and growing our business and making investments. With that, I will now invite Ken Costa, our Chair, to join Tope and myself for Q&A, following which Tope and I will say a few words to wrap up the session of the AGM. Thank you once again.

We'd now be pleased to answer questions from shareholders and guests who wish to address the meeting. We'll be taking questions from the floor as well as through the virtual meeting platform. Belinda Blades, our CFO, will be joining us as well. For each online question, I'll read out the question. Participants in the room may raise their hands, and we will -- a microphone will be brought to them to ask their question and ask please to state their names. Please limit your questions to topics related to today's subject matter. We'd like to remind you that questions which were already answered or that are redundant or repetitive will not be answered. If we don't have the opportunity to answer your question now, we will do our best to follow-up after the meeting. I have already seen an indication of a question from the floor. We will take them in the order, sir.

My name is Michael [ Murphy ]. I'm an investor. I'm a long-standing investor and a long-suffering investor. I actually have 4 questions based on my reading of the annual report and also with this excellent presentation. The first question is how long is it going to be to clean up the mess that you were given from Hamblin Watsa and the previous management led by Michael Wilkerson? As I understand it from your presentation, you think that by the first quarter of 2024, it will all be done and finished? Or do we have to go through another year of 25 pages of explanation of what went wrong?

Thank you for the question. Thank you, sir. Baba, do you want to take that?

Okay. I think you concluded that quite correctly by Q1 of 2024. By the end of Q1 of 2014, we should have resolved and exited that portfolio of companies and investments.

Thank you. Can we take them all together?

My second question is, as I understand it in the reading of the annual report, if the Helios transaction had not taken place right at the end of December, my understanding is the book value of the company would have been about $3.20, not $5.50. Because really the $2.20 -- sorry, $2.30 of book value was put in on December 20. That dramatically understates the mess that had occurred in the previous 3 years. Is that a correct statement? And if it is, if you want to be transparent and give a good annual report, which has been a hallmark of Fairfax, you need to have another column, which has adjusted book value, which currently stands at $3.17. And by the way, that was only disclosed on Page 46 or 47 by the way, which I don't think is appropriate.

Thank you. Tope, did you want to?

Yes. I'll give that a go, if that's okay. First, I just need to make sure I understand your question. I think what you said was, if I understood it correctly, was that the -- had the transaction not occurred, the picture on the balance sheet would have looked worse than it actually was.

In other words, if you had taken over the situation in March, February of this year, the book value of Fairfax Africa would have been $3.20 and not $3.50 as published in these reports.

Yes, I can't say that I'm familiar with that because I haven't done the exact analysis that you've done. So I can't say that I'm familiar with those precise numbers. But I do think it's correct as your first question suggested to say that the trajectory of the existing portfolio, the legacy portfolio, as we call it, was not great. I think there's some that's -- yes, I think were some investment-specific causes that were related to that and some were environmental. But the view that we've taken candidly is twofold. The first thing is from your perspective as a shareholder, because of the insurance -- portfolio insurance and guarantees that we're able to negotiate, we're able to give you some assurance that there's a floor underneath that negative trajectory of the historical -- the investments that were made historically. And so, our job is to continue to sort of maximize the value of that portfolio and really to focus on how we're going to restore you not from -- not back to where you were a couple of years ago, but maybe back to where you were 5 years ago, right? That's our objective. And we believe we're on the way to doing that.

Well, if we -- based on $3.17 book value and the growth of that book value and not the $5.50 or whatever, it really should be in terms of transparency, it should be in that column on the first page of the printed material in the annual report, I would submit.

Okay. We can follow-up on that because, as I said, I'm not quite familiar with the numbers that you said, but it's a valid point and we can follow-up on that.

My third question is covered under the management report on internal control over financial reporting. I have been in the investment business, and I've read many, many annual reports and this one really was a shock. But in it, it says on Page 56, as of December 31, 2021, you decided that you couldn't determine the actual values as I read that statement without further work. And you've been in there for a year, and it could be that it's been there for a long time. And I've never seen a 7-page report from the auditors delineating how everything should and has to be done. And my question is, did you, as a management find that out on December 31, 2021? Or was that pointed out to you by the auditors? Or where did it come from, that you came to that conclusion?

Yes. Should I answer that, Jenny or do you want to...?

I'll take that.

Okay.

So I just want to make sure that I'm clear on the question. Are you referring to what is described as a material weakness?

I will read it to you. "As of December 31, 2021, the following material weakness has been identified and included in management's assessment. The company did not maintain effective controls over the completeness and accuracy of inputs and the reasonableness of assumptions used in its Level 3 valuation process. Specifically, the company did not maintain effective review and monitoring processes to: one, verify the accuracy of the valuation model inputs; two, identify adjusting events; three, assess the response of the reasonability evaluation models, inputs and assumptions. The company changes valuation process in the fourth quarter of 2021 and did not adequately evaluate and change its existing controls, et cetera, et cetera, et cetera." I mean it's incredible. That statement is quite a shock to me.

So I will address that. What we're really looking at is we had transitioned our valuation process from one place to another. And in doing that, -- so which we previously did the valuation process with a different valuation team. We transitioned the valuation process to the Helios team as part of the overall transition of the strategic transaction. In doing so, we had not looked at evaluating all of the controls that would be required on the transition. As a result of that, we discovered an error in our valuation process. That error was discovered prior to issuing the financial statements. That error was corrected in the financial statements before they were issued. No other errors were noted, no restatement was required. What we have done since then is taken a closer look at our controls, taken a closer look at our processes. We have developed a remediation plan. The remediation plan is in process of being executed. And each quarter, as we report, we will report on the status of that remediation plan and the implementation of our controls.

Do you mind if I just?

Yes, of course.

I think fundamental at the root of it, I think what you -- what we've sort of seen over the course of the last year is that you have the Fairfax Africa operation, which runs to a normal public company cycle. And you have TopCo LP, which comprises a series quite a few individual private funds and partnerships, and they operate to a different cadence. So I think when you have this wheel spinning fast and this wheel is spinning slow and they're coming together, I think inevitably in the sort of meshing of those gears, you're going to have a little bit of friction. But I think we understand fairly well what the issues are and what needs to be done to fix it. So we're feeling quite confident actually that this won't recur.

Okay. Thank you. That gives me confidence. My final question relates to the long-term growth estimates that you would be using that you think would be reasonable because you're in the investment business and you're in the business of assessing where worth is and where it's going. Using the $3.17 as the appropriate book value for Fairfax or Helios Fairfax, what would be a reasonable assumption of long-term expected growth that I can see over the next 10 years of this association.

Well, I'm sure that Julia, our Corporate Secretary and General Counsel, will warn me against making forward-looking statements. But suffice it to say that, look, I think as a team, we are, I would say, and I believe I speak for Baba and the rest of our team, I think we are a fairly driven bunch. I think we're a fairly motivated bunch. We're a fairly ambitious bunch, and we don't like to fail. And I think that we probably have a desire to see HFP succeed to probably a greater extent than any other shareholders in the room. And I think our interests are personal interest and economic alignment for that matter is extremely strong. So -- we will do everything that's humanly possible to ensure that this succeeds, but it's very difficult for me, as you might expect, to put forward sort of an expected outlook in terms of growth rates.

Okay. Just within the context, if you tripled the value in the next 10 years, I'm back to where I was in '19 -- in 2018 or 2017. So I wish you every success.

Thank you.

You want to add something to that, Tope.

I think the key point is that we're very aligned with you. That's all I want to say. We're just extremely aligned with you, and we are -- yes, we're all in and just going to make that successful as possible.

And thank you very much for your questions. At the back there, gentleman in the back.

I'm Paul Durnan from Burlington. Okay. Am I right in understanding that Fairfax Africa was formerly a division of Fairfax Financial, the insurance company. Is that right? And you've taken it over from them? Or maybe there's no connection at all between the 2 and Fairfax? Do you owe a royalty to Fairfax Insurance Company or you bought it from them? Or what's the story there?

Sure. So if I may. So I don't believe -- I wouldn't characterize Fairfax Africa as having been a division of Fairfax Financial. It was sponsored, I suppose, created by Fairfax Financial. The capital for Fairfax Africa was raised with the sponsorship of Fairfax Financial and their capital as well. So Fairfax Financial was the prior to -- was the majority shareholder, although it was a public entity, was a majority shareholder in Fairfax Africa. We then, in the transaction that occurred in December of 2020, we combined TopCo LP, which is an entity that has the right to receive a share of the carried interest and the excess management fees from Helios's funds. We took that entity and combined it for shares with Fairfax Africa and renamed it Helios Fairfax Partners. So the relationship that Helios Fairfax Partners has with Fairfax Financial is one in which Fairfax Financial is a significant shareholder in HFP is represented on the Board. And of course, there's a very strong working relationship between HFP and Fairfax Financial.

Okay. What is their share of interest in the company? Are they 1/3 owners or 1/3 of the shares or how they…?

Economically, that's about right. And from a voting standpoint, a bit more than 50%.

Okay. Well, that's the majority vote, isn't it, if it's more than 50%?

Correct.

Yes. Okay. Just sure would be nice for a turnaround in the share price, but you've already addressed that.

Thank you. We have a question here.

Ian Collins from PenderFund. I'm just curious, a great presentation. I'm just curious about how you ended up getting together with Fairfax, how that came about? And then I'm curious, just with the legacy net asset value of 2.34, how confident you are in that number? And how you can protect the downside of that number? And then the last question is your alignment. You spoke about your alignment. Just how invested you are through TopCo or just Fairfax Africa?

I think you know better than I. So in answer to your first question, how did we meet or get involved with Fairfax Financial, actually, Prem and I were introduced by the gentlemen to my right, Ken Costa, who -- Ken has been a long-standing adviser and friend, I would say, to Helios a firm and understands our business quite well. Prem has also been a long-standing friend and associate of Prems. And he understood the Fairfax Africa business. I think Ken understood the Fairfax Africa business and circumstances quite well. I speak for him when he's sitting right here and could speak for himself. But I think Ken identified that some of our own -- as Helios investment partners, some of our own strategic objectives matched very well with some of the needs that Fairfax Africa had that Prem had recognized. And so following a series of meetings beginning in London, we got to know each other fairly well, I think realize that the cultural affinity was quite strong. I think the way we run our business is very similar to the way Fairfax runs its business from just an ethos standpoint. We realize that our objectives and needs were quite compatible. So that was the genesis of the meeting. I think your second question related to the -- how do we know that the value of the legacy assets is essentially underpinned, if that's right. Yes. So the way we -- it's a 2-part answer. The first is that when we made the -- when we did the transaction to begin with, there were a few exposures or a few positions, I should say, in the legacy portfolio that we felt to which we assigned out I would say much higher risk profile than perhaps the Fairfax Africa team, the former Fairfax Africa team assigned. And we took the view that it wouldn't be -- that we would not be in a position at least at the exchange ratio that was being mooted to complete the deal. And so even though I think this was not really -- I think this is testimony frankly, to the strength of sponsorship that comes from Fairfax Financial and from Prem. They stepped in as a shareholder, no more than that as a shareholder, to actually underpin the value of some of those positions. So they showed quite strong sponsorship there. So that was the first part of it. And so, a portion of the investments in that -- of the positions in that legacy portfolio are in short or rather guaranteed in that way by Fairfax Financial. And then not long after we completed the investment, we then negotiated essentially an arm's length, further insurance kind of fundamentally works as an insurance deal, which is captured in the -- there's a $100 million debenture if that seems familiar to you. The majority, the value of that -- which Fairfax Financial invested in, i.e., they gave us $100 million of proceeds of capital. The amount that's due when -- upon maturity will fluctuate depending on the value at that point of another subset of assets in the legacy portfolio. And for that, of course, we're paying and making an interest payment and issued some warrants to Fairfax Financial. So between the debentures or that portfolio insurance as we refer to it, and the guarantees that were done at the time of the deal, we feel quite sure that the downside of that portfolio is underpinned unless you worry about the credit quality of the counterparty, which we certainly don't.

Just last question on the incentive, just your ownership with the different structures.

Sure. It's actually quite simple. When we made the -- when we combined TopCo LP with what was then FAH, we did it for shares. And so when the -- now when the dust is all settled, the Helios individuals as a group own about 46% of the -- of Helios Fairfax Partners and Bob and myself are the predominant portion of the 46%. But as Baba indicated in his presentation that equity runs right through the firm. So 46% of the company essentially is owned by Helios individuals. And so we're really, as Bob said, a few minutes ago, extremely aligned from an economic perspective with you.

Thank you. Have a microphone here.

My name is [ Vik Verma ]. I work with an investment firm out in Montreal, and I've followed the Fairfax story for the past couple of years. So I guess if you guys could speak to private equity in Africa and where you guys stand in it? Because you know when it -- so it's the legacy assets and the investment manager. When investment money just work out, you don't have to worry about all the other stuff. So we know some of the players out here like the Brookfields of the world, but we don't know too much about -- well, I'm African, but I don't know too much about PE in Africa. So if you can just speak to the landscape, where you guys stand? Anything that would be helpful. And then maybe just out of curiosity, if you can speak a little bit to the NBA Africa investment, either you or Mr. Ujiri, just any perspective, just what are the milestones we should be looking for? Anything you want to discuss that can be discussed publicly. So just those 2 kind of buckets like private equity in Africa, where you guys stand and then NBA Africa investment.

Thank you. Baba, do you want to take the first question?

Yes, thanks for that. How long have you got? So I think to characterize African private equity is -- I'll say to that, I talk about us that puts us in the broader environment. To-date we've, I think raised about $3.8 billion of equity and investments reported, equity in Africa and raised about -- in total, we've actually invested across Africa about $10 billion. I don't think anybody else on the continent actually -- I can't from my hand on my hat, I don't know the numbers. Can't speak actually about -- actually investing that level of capital across the continent. That's the first. The second I would say is that I think it's actually what we hear from our investors LP, because that's all we can rely upon because we don't know any one as this performance is that amongst the landscape of African funds, we have the top 1%, 0.5% of their portfolio that actually does the returns we generate and our velocity of returning capital back to them on a regular basis. Now the Africa PE landscape is not the same as the U.S., the U.K. It's a lot more challenging. That's the reasons why that outcome exists of just a few -- a small number of firms, delivering good returns and being able to actually go out and raise extra funds. I mean the key thing to do is actually just the people. The people -- being able to attract a high-caliber, high-quality team that actually understand the continent, been there, grown there, worked at top firms, Bain Capital, TPG, Carlyle and the likes, actually applying their expertise and skill to that landscape. As I said earlier, we designed this from the beginning to make sure we had just a world-class PE team and had people present in offices in Lagos and Paris, which are actually massive hubs for deals like Miami to Latin America, Lagos is in Anglophone Africa. So we actually sat down, thought about it all very properly and build what we think is the top class team in a challenging environment. You want to add more to it?

You want to cover the NBA.

Yes. Why don't I just maybe cover that just briefly. So look, the investment in NBA Africa, actually, in a lot of respects, really captures a lot of the themes that we highlighted in the presentation I gave earlier. And that's for us is sort of the demographics point. So if you look, as I mentioned before and I won't repeat myself, clearly, in terms of where the young people are and where the young people are coming from, it's heavily Africa. And so if you're a league like the NBA, this will apply probably even more acutely to something like the NFL. For you to have a product that is of the quality that it has been historically going forward, you need to be engaged in Africa. So 20 years ago or 25 years whenever it was when I was living in the U.S., you probably had 2 players in the NBA that were either African or had at least 1 African parent. Masai will correct me if I get the number wrong. But today, that number is comfortably more than 50 and rising quickly. And we think that's just a one-way street. So first of all, in terms of the need for the NBA to be engaged in Africa, it's -- I think it's an imperative. But the second is, of course, on the technology side. Now for monetizing the NBA product, the NBA after all is a media product. We're monetizing the product historically. In Africa, it's been challenging because Africa is not a wealthy continent. And so to the extent that you tell people that in order to watch an NBA game, you have to subscribe to a cable service or satellite service at $100 a month, et cetera, et cetera. Well, they're just no takers because not many households can afford that. But technology has changed all of that. You can now have -- it's almost like an atomization of content, so I can watch -- I can pay a certain price to watch it a day late. I can pay a certain price to watch highlights, I can pay a certain price to -- there are all sorts of packages that are just infinitely affordable. So the bite size has become more affordable. So the potential to monetize the NBA content in Africa has gone up dramatically in a way that even 10 years ago, it wasn't possible because the technology didn't exist. Smartphones are now in the hands of many people in the continent, and that's growing. So in terms of what we're looking for, step one, of course, is to continue to drive -- and I should say, by the way, the 2 other characteristics of the NBA in Africa already that predated the formation of NBA Africa. One is, it's already behind soccer football. It's already the second most popular cited, the second most popular sport on the continent, and that's without any over investments and no one's actually really tried, but already, it was the second. And the other characteristic that I found particularly interesting is that when -- in surveys that were done of people who identify themselves as core fans, whatever that means, in many countries, up to 40% of that core fan base were female. And that's very different from football. And the reason that's -- which is much more male and skewed. And the reason that's interesting is that it lends itself much better to a family audience. And right, that just broadens the base beyond sort of just sort of men going and drinking at the football match. So I think that there's a much broader potential base there. And so step one, it's really drive that -- the fan engagement, which is a lot of the work that the Basketball Africa League is undergoing. And then step 2 in the next stage of the development will be to really focus on the monetization.

So do you want to add anything to that? And I'm looking at Masai.

No. I think Tope said it all. Africa has talent. I think it's people. If I say it in like the shortest words, I can say you check out the NBA playoff game today. The 2 best players are Africans. Joel Embiid, who could be the MVP of the league and Pascal Siakam. I think that says it all almost. That's where -- the NBA never focused on investing in the league in Asia, in Europe or in South America. They focused on Africa. And the talent is what drives it, population, the youth, the biggest followers of the Premiership, which is, I think, the top in football, basketball comes second. I think there's a huge drive towards entertainment, technology. Every way you look at it, I think 10 years from now, we're going to look at this thing and say, there is talent in Africa, and we should actually like be focusing on a league in Africa and growing that ecosystem.

Thank you very much from an expert on that. And we got a question here.

Thank you for giving me the opportunity to ask 2, 3 questions I have. And firstly, I would like to say, I feel it's unfair for…

Could you just give us your name?

Yes. My name is [ Gursam Ranbir Singh ] . I'm based out of Montreal, and I run a family office based out of Montreal. And I'm a shareholder of Helios Fairfax. I think it's unfair for you guys to take the heat for the mistake that Fairfax Africa make. And in all honesty, I feel Prem and Michael should have been here to answer the questions that like long-term holders of Africa had regarding the mistakes that they have done. My first question is regarding Fairfax Africa itself. And it's more on the annual reports and the statements that Michael and Prem made over the course of 2, 3 years before getting into a transaction with Helios. Those statements were along the line of that the share price does not reflect the intrinsic value of the portfolio. The intrinsic value of the portfolio is much higher, be it the investment in Atlas Mara or the total value of Fairfax Africa, the book value of Fairfax Africa. In the annual reports of Fairfax Africa it is mentioned multiple times, even like 2, 3 paragraphs are devoted how Union Bank of Nigeria stake is alone like 3x the present value or the share price of Atlas Mara and how this is only temporary. So I just want to ask you guys the question given your pedigree and background in Africa, like how do you feel comfortable getting into partnership with people who are privately negotiating with you guys to do this transaction while at the same time reaching their fiduciary duty by making materially false treatments to their present shareholders?

Well, look, I think Mike -- again, I speak for Baba. The experience that we've had with the Fairfax team has been nothing but spectacular. I think they've -- I think every interaction we've ever had with them as they've demonstrated the absolute highest level of just integrity and sort of partnership orientation, et cetera. Look, in the end, we're in the investment business. And we ourselves have made lots of our own mistakes historically, and there's no doubt we'll make many more going forward. We weren't here 3 years ago. But to the extent that 3 years ago, someone had a view that a particular asset was worth more than it transpired to have been worth, these are the kinds of investment judgments that we make, and in some cases we're right, some cases we're wrong. So from my perspective, at least, and Baba maybe you can add after this, I view that as within the realm of things on which people can disagree, right? We thought the assets were worth X, someone else might think that they're worth Y. But there's never been any interaction we've ever had with Prem, Michael or indeed anyone associated with Fairfax Africa or Fairfax Financial that has led us to believe that there's anything that should cause us to not want to do business with them. It's been an absolute pleasure.

But I'm sure you must have read their description in their annual [indiscernible] regarding Atlas Mara stake, for example, just to pick one. We have to materially state that the Union Bank of Nigeria stake is alone worth more than the present share value of Atlas Mara. and then they end up selling or you guys end up selling to them for like transactions that materially undervalues even that share price. So I am just trying to understand, it is not like gray area. It is pretty black and white, where they materially state X and then privately negotiate with a third party where they undervalue the actual value of that asset like, for example, for Atlas Mara.

Let me have a go. I mean, I think I'll separate 2 things. There's an investment manager and there's Fairfax Financial, which Prem and [indiscernible] works. I think if we're to ask them what we think would have done differently? There were manager at a point in time that actually managed Fairfax Africa, who are not Africans, who are not private equity professionals. So I don't think anybody did anything that was malicious or anything. I don't think it was a lack of experience of Africa and private equity that perhaps resulted in some of these things you're talking about. But I mean, I think the gentleman of people and ladies on Fairfax, I think are some of the most transparent, high integrity and agile and just very well managed and brilliant people I've come across in business.

My second question is regarding Helios Fund IV and Helios Fairfax. So you are in the business of negotiating a lot of privity equity investments and some of the really good private equity investments only have limited allocation. So in place, there is a conflict where you have to pick whether you invest through Helios Fairfax or through one of the Helios fund, who gets the preference? And how do you resolve that conflict?

That's an excellent question. Excellent question. So the first thing is that we will -- if you know, there's -- what you should expect to see is that the Helios Funds will be the -- take private equity, for example. That's the vehicle through which we make our private equity investments. Helios Fairfax Partners is an investor in the Helios Funds. It's not paying a fewer carry, obviously, right, but it's an investor in the fund. And so every investment that we make through the Helios Funds will benefit Helios Fairfax Partners. You see what I mean, there's exposure. In some cases -- and this was the case with Tron Holdings. In some cases, the size of the investment itself might exceed what we think is prudent or what the fund has capacity for. And then it creates an additional co-investment opportunity, which is what happened in the case of Tron. But what you won't see is there's no cherry picking. So there's no -- this one belongs there, this one belongs there. Now you might ask, well, what about the last investment we spoke about, NBA Africa. That's almost the exception that proves the rule. And NBA Africa, by its nature, is not a private equity investment because it's a long term -- it's driven by trends that are much longer than the investment horizon of a PE firm. So we don't think that it fits in a private equity fund of limited life at all. And by the way, even if we believed it did, the NBA itself was not willing to transact with a fund. So the question of should we do this on the fund or in the back, doesn't really arise or certainly wouldn't arise going forward.

And my final question is regarding skin in the game. You mentioned that your interests are like fully aligned with the shareholders of Helios Fairfax going forward. And you can completely skip this question, but would it be fair to assume that majority of your liquid net worth would be invested in Helios Fairfax going forward?

Speak for only myself, the answer is yes.

Thank you very much. If there are no further questions -- there's one more here before we take questions from analysts online. In the far right.

This is Balkar Sivia from White Falcon Capital. I just had a few questions on investment philosophy and kind of a follow-up on PE in Africa. Can you kind of dig deeper and kind of talk about how many deals do you guys source yourselves versus coming to you by bankers? What type of value add, maybe with examples that you guys typically -- I mean, are these mostly growth investments, margin opportunities, CapEx investments? And the last thing is if you've made mistakes in the past, what were those mistakes? And what have you learned from them?

Do you want to add?

Okay. Let's take it together. Let's take it together.

I'll do the rest, you can do the mistakes.

So the easy bit, I think the first thing is actually, if you look at actually, we do this, we run -- every year, we look at actually a pipeline to deals. And we end up with roughly I think it's about 2% of what we see is what we actually end up doing. And I would say the numbers were about over 95% of the deals we see are proprietary because they're just very little of the service provision industry. There's no Goldman Sachs. There's no Morgan Stanley. There's no Scotia bank. We're very thematic. So we sit down, we figure out you've got the sectors we pointed about, digital infrastructure. There are no tower businesses in Africa. What do we do? We started the first tower business in Africa in Nigeria. We sold it. Started a second tower business in Africa across the whole continent. We do some infrastructure. Look at data centers. What do we do? There's actually nothing. So in South Africa, nothing else to really purchase. So we're actually in the process of working off a couple of transactions. Can't say much, but let's see they transpire or not. So the point I think is that we are business builders, there's very little intermediation or investment banks involved. And I think it gives you the opportunity to make less mistakes because you have the time to really carry diligence properly without fail somebody over your shoulders offering to bid more than you. I couldn't do the deal in 5 hours, the deal is gone. So I think our deals as a result actually quite a bit longer to do many deals. Actually, we see them the first time, you think about them, you develop your theme on that actually, and you end up transacting on them. So that was the first part of your question. What was the second part of your question?

Mistakes.

Just drivers of value add.

That's an excellent question. That's an excellent question. So if we -- so from the demographics that Tope said, and actually look at Africa, the place where the penetration of everything in -- bank accounts like 25%, 30% of financial inclusion, quite low. Telecoms a bit higher, electricity, power supply, access to electricity is one of the worst anywhere in the world. So what you got is a place actually where it's about growth. It's about provisioning people with production services that they've never had before in a cost-effective manner. So it's all about growth. We've done 1 or 2 buyouts in our portfolio where I would do those where we actually have a big multinational that wants to exit Africa, and so we can go to them and acquire a subsidiary, a division or some assets from them in a bio-type transaction. But I think Africa is just -- you do those transactions about growth. A very recent deal which Tope led was Vivo -- not recent actually, it was quite a long time ago, which is actually bought fuel station, gas stations from Shell in Africa. And the thesis for us actually was if you look at actually the growth in demand driven by population growth and just a wealth effect. As people get wealthy. They can buy cars, they didn't have cars before, and population growth actually resulted in a GDP times not plus, a multiple of GDP times type growth rate in that business, and that's played out for us quite nicely and resulted actually in a very, very strong multiple of money investment for us. I mean, Tope you want to add anything more to…?

No, I think -- but I'm happy to talk about mistakes. So we made -- and I'll just maybe one that occurs to me is connected to the investment Baba just described. So we have had a very, very good success with the Vivo transaction and the petrol stations business, at least in Africa is one that we feel we understand quite well. We made another investment in the same sector in the same business in 2016 in Nigeria, where we bought the -- we essentially bought the petrol stations out from an energy conglomerate. And the bet that we were making there was -- in Nigeria, the way it was then was a very awkwardly regulated market with some -- all kinds of inefficiencies and stickiness involved in it. And the bet that we made was that we were buying the #1 asset in the sector with the best locations and a very good sort of supply chain. And importantly, the regulatory landscape would, over the course of our -- because it just seemed unsustainable. We felt that it would improve over a period of 3 years, maybe 4 years. We sit here now 6 years later and it frankly hasn't changed. And I think the lesson there is that just never underestimate the ability of a regulator to be unreasonable for longer than you might expect. So unless there is a reason to believe otherwise, I think we take the lesson there is take the regulatory environment as you see it and as opposed to sort of underwriting to an improvement. But that's an example.

Well, thank you. I'm going to take the questions from those of our patient shareholders online. I want to take a question which we have. What is the reason for the decrease in the TopCo valuation? Belinda, do you want to take that?

Sure. I will take that one. So the TopCo valuation, it decreased about $24 million from December 2020. And just as a reminder, the TopCo valuation is based on excess management fees, so the flows from that and the flows from the carried interest when investments are sold and we meet a particular threshold. So the reason for the decrease was the excess management fees were less than expected, and that was really driven by the covid environment, the fundraising environment. And as a result, Fund IV did not raise as much money as expected that impacted the excess management fees that impacted the valuation, and that is the driver for the decrease year-over-year.

Thank you. We have a question from [ Sid Dev ]. What update can the company provide on efforts to raise the further capital within credit and real estate as both were discussed as potential growth verticals during the prior AGM?

Sure, maybe I'll take that. So the credit and real estate, for sure, still interesting asset classes for us. And when I say us, I mean for Helios Fairfax Partners but also by extension or sub-adviser, Helios investment partners. I think the -- and so suffice it to say that those are still trying to figure out what the right means of entry into these markets would be is still work that we're doing. I mean real estate, for example, one of the advantages that you have in developed markets is you might have a REIT structure, which enables you to raise capital quite efficiently. REIT structures are obviously a tax concept. But of course, in Africa, there are 54 countries and therefore, 54 different tax regimes and to achieve sufficient scale in one individual market is a little bit challenging. So there are a number of challenges in these areas. Now on the other hand, there are quite a few -- I'm not sure that -- I look for Julia. I don't see Julia. I might be a bit restricted in what I can speak about. But suffice it to say that there are quite a few other initiatives in addition to these that we are working quite hard on that we believe are quite relatively advanced and where we're optimistic about being able to have something more to share in the near term.

Thank you. A question from Michael Wood. As I understand, Helios TopCo manages $3.6 billion assets under management at year-end. What has growth rate in AUM been over the last 5 years? And what has the performance of the funds been like?

I know what I can speak about. Okay. So I think actually, I mean, it's just as kind of commercial business, you raise funds every sort of 5 years. So it's actually quite lumpy. So looking at 5 years is perhaps not the right time frame to look at things. But I think if you say we started 17-ish, 17, 17.5, 18 years ago, and our first fund was $365 million. So that's a 10x in terms of funds of assets. Okay, it's reduced -- actually more than that actually, money raising more than $3.6 billion. So as we look at the -- the first fund was $365 million. We're now at $3.6 billion. That's roughly 10x in a period of about 17 years. I don't think that kind of growth rate is -- who knows actually. I can't say much about the future. But I think that's like 10x in the last 17 years. Is that actually purpose of the funds? I think what I will say is that we are paying carry to TopCo, yes, and they're previously being carried, so which sort of suggests that we are doing -- attributing returns over and above the hold that we've got.

I think we'll have one further question, and then I'll come to you, sir. From [ Jerome Fan ], could you please elaborate how cryptocurrency promotes African economic development? Will these be via central bank digital currencies or more decentralized cryptocurrencies?

Sure. Well, look, I think the fundamental problem that we're highlighting in the presentation is that you have institutions, specifically central banks that are not trusted. So fiat currency obviously relies on the trust that the population has in the regulator and the central bank of the -- that controls that currency. So when that's lacking, you have a problem. So Central Bank digital certificates or digital currencies, I don't believe we'll have -- will gain a lot of traction. In fact, Nigeria has actually issued or least trialed a central bank digital currency. But for the same reason, that the fiat one doesn't instill confidence, it's unlikely that a digital version of the fiat one will instill confidence either. So our view -- and again, I don't want to hold us out as experts in cryptocurrencies, but our view is that it will be decentralized ones. Stable coins, for example, are highly valuable. But the point is if you -- when you have -- I'll give you -- since we're talking about Nigeria, in 20 years ago, the exchange rate of the naira to the dollar was about 70:1, 70 naira to a dollar. Now it's probably 600:1. And so you can imagine what havoc that's wreaked on people whose savings exist in naira, in a market where, of course, inflation has been high. So the point is that people are looking for an asset that is not tied to the fiat or to the whim of the government. So I think it will be decentralized and it's about reducing friction in the financial system, enabling people to sort of save, enabling people to transact across borders in particular. And I think that -- and I don't see Central Bank issued cryptocurrencies fulfilling that need.

Thank you. I think that would be our last question.

Well, first of all, my name is [ Jean-Francois Naber ] from Montreal too. First of all, a terrific presentation, I mean, that's very impressive and the whole team, and I would like to salute also the humility and courage of the management to have taken that step forward to change everything, and we see the integrity of all the Board and everybody here is a very impressive track record and everything. So that's the first thing. So my question is also related to crypto currency. My first question, I would like to have 2 questions, if I may. My first question is related to cryptocurrency and you talked about financial inclusion. You talk also about Fawry in the presentation. What would be like in your investment portfolio, the top firm you have invested in, if you may share that are working out with the blockchain to help Africa in the field of financial inclusion?

I got the second part of your question. I think in terms of current investments in the portfolio, we don't have any companies that are active in the cryptocurrency space per se. And to be honest, I think that our view is not necessarily that we're in a position to pick winners and losers in the cryptocurrency space. It's really a statement that should cryptocurrencies actually take hold in these markets in a way that they're already doing almost by stealth, that it would transform the whole economy and actually make it so -- and sort of make all of our investments, whether they're directly involved in cryptocurrencies or not, better off. So it's an improvement in the health of the financial system overall. And of course, there might be individual investment opportunities that are triggered during that process, but really was the thrust of it.

That's great. And my other question is you talk about the demographic and everything, the urban area and so forth. Do you believe in the prospect of investing in real estate? What is your position right now in that and looking forward in the future related to real estate?

Yes. I mean, again, to echo Baba, it depends on how much time you have. The short answer is we believe very strongly in real estate. But remember, we're a U.S. dollar investor, right? So our view is that we need to develop or rather generate a U.S. dollar return. So when you're investing in real estate, which is ultimately a local -- a very localized business, yes, it's true that the assets themselves, historically, we've seen all -- we've seen that real estate assets in Africa preserve their value against inflation. So that works. But from an income standpoint, you do need to be very cognizant about the FX effects of what you're earning out of this the real estate. That's number one. The second is that in Canada, in the U.S., in the developed world, you have a much more liquid real estate market because you have, whether it's pension funds, you have lots of individual buyers of either real estate assets, the assets themselves or real estate securities. You don't really have this -- and I think having that liquid secondary market for real estate is an important element to actually building a successful real estate investment theme. And so that's -- now the exceptions of that, South Africa, which is a market that some of our board members know very well, actually is an exception to that. There's actually quite robust institutional real estate market in South Africa, but then that cuts the other way because there's a fair bit of domestic liquidity that's trapped in the country, and therefore, prices yields, et cetera, never really quite get a level of attractiveness. So -- but for sure, we think it's highly interesting. It's a matter of figuring out exactly the how.

Well, thank you very much. Baba, do you want to have a concluding remark to the question.

Yes, yes. Yes, yes. Actually, okay, I'll start first by actually saying it's actually a real pleasure to have everybody here today. I think when we're planning this event last week -- actually the one before, actually last week when we worked to get the filming done, we were not sure if we were actually going to be virtual or in-person. And we arrived here. We had about a day with snow storms and everything 3 days ago. And we're not sure if anyone's going to make it here. So I think to comment on this room, as we so many of you here today, I think going to thank you very much for your time. Actually, Masai, as a director, but I think the game tonight, actually, I don't know what the guys are doing before the game, but to actually have you turned up on a day like this in the playoffs, I think it shows your commitment to Helios Fairfax and so thanks for your continued commitment to us. I hope you all actually really enjoyed the video and have the excitement that Tope and I have of the potential journey ahead of us. I hope the videos and the questions and answers to the questions conveyed really, really how positive we are about the future. We have to deal with some of the past issues, but the future, we think, I believe is really, really positive. It's orange. It's a joke in U.K. We're also grateful to you for your continued trust in us. Capital is with us. We are confident with capital, and we really appreciate you trusting us and giving us a chance to prove that we can deliver on what we believe we can. So thank you very much. And I think last but not the least, I would like to thank Belinda and Julia, who I think have kept us on the straight and narrow. And the team at Fairfax led by Quinn for being excellent partners and being really, really, really good with us and patient with us and supportive for us. And last but not least, Myra and Jonathan over there, who actually made this happen and without them, I think, yes, it wouldn't have been as smooth as this. So I think with that, I'd just say thanks, every once again. I'll just hand over to...

Thank you, Baba. And on behalf of all the Board of Directors, I wish to thank you, all our shareholders, both here physically and those online and our guests for attending today's Annual General Meeting. We're excited about the year to come, and we look forward to discussing it with you at next year's annual meeting. Thank you so much.