Aimia Inc
TSX:AIM
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Aimia Inc
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Good morning, ladies and gentlemen. And welcome to the Aimia Inc. First Quarter 2023 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions]. This call is being recorded on Friday, May 12, 2023.
I would now like to turn the conference over to Albert Matousek, Head, Investor Relations and Communications. Please go ahead.
Thank you, Brian. And welcome everyone to this morning's call. Today's presentation is available on SEDAR and on our website.
Before we get underway, I would like to remind everyone to review our forward-looking statements and the cautions and risk factors pertaining to the statements.
My name is Albert Matousek, Head of IR and Communications. With me on the call today are speakers Phil Mittleman, Aimia's CEO; Michael Lehman, our President; and Steve Leonard, our CFO. Phil will begin with our strategic highlights, followed by Michael who will cover the performance of our investments before handing the call over to Steve to take you through the results of the quarter. We'll have time for your questions at the end.
With that, let me hand it over to Phil.
Thanks, Albert. And good morning to everyone on the phone and webcast today. We are pleased to announce the successful closing of the Bozzetto and Tufropes transactions as well as the Bozzetto debt financing, two cash generating businesses with significant value creation potential for our stakeholders. Furthermore, we are very excited about the strength being exhibited by all of our current portfolio holdings.
On May 9, Aimia closed the Bozzetto transaction and the associated debt financing at the subsidiary level. Aimia invested CAD 206.3 million for an equity stake of 94% in Bozzetto, investing alongside the management team who purchased 6% of the company at the same valuation as Aimia. We look forward to working with this remarkable management team as they continue to grow this business organically and through strategic acquisitions. And it is in advanced discussions with a potential target in the Americas.
On March 17, we closed the Tufropes transaction and acquired 100% of the company for CAD 239.2 million. Following this acquisition, the leadership team has actively engaged with customers, suppliers and employees and the response has been overwhelmingly positive. The team is exploring new opportunities for potential strategic partnerships, and is actively pursuing an accretive acquisition target in the US.
Tufropes' expects adjusted EBITDA margins to grow about 20% within the next two years based on reasonable assumptions such as operational improvement initiatives, as well as the optimization of product mix.
Turning to our financial results. We ended the first quarter of 2023 in a strong financial position, with over CAD 318 million of investable cash and liquid securities, a diversified portfolio of holdings that we believe are poised to deliver strong results in 2023. In addition, the company has tax losses of approximately CAD 660 million that will help shield a sizable portion of our taxable income and capital gains for years to come. As a reminder, at the end of 2022, Aimia utilized CAD 130 million of capital losses to repatriate a portion of the PLM gains.
Turning to our holdings, Clear Media is seeing a sharp recovery in demand beginning in its second quarter of 2023 as China emerged from its COVID lockdown, and we expect Clear Media to accelerate the digitization of its panel portfolio.
TRADE X's enhanced asset light model is achieving some of the highest gross margins to date. TRADE X projects a return to EBITDA profitability by the third quarter of this year. Éric Gosselin, currently the COO, will be named CEO on June 1, as founder Ryan Davidson focuses on business development.
Kognitiv's new CEO, Tim Sullivan, is overseeing the launch of its new AI powered product, Kognitiv Pulse, which has been met with industrywide praise and excitement. Kognitiv continues to undertake a series of initiatives to reduce costs and increase efficiency, which is expected to drive the company towards EBITDA positivity by the end of the year in 2023. In addition, Kognitiv is securing additional sources of financing through divestitures of non-core assets.
Capital A is experiencing a strong rebound in its airline business, generating its first profitable quarter since the pandemic began amidst soaring demand.
And with that, let me turn the floor over to Mike to provide you some further color on our investment portfolio. Mike?
Yeah. Thanks, Bill. And good morning to everyone. As announced earlier this week, we closed the Bozzetto transaction and the associated debt financing. Aimia invested CAD 206.3 million for an equity stake of 94% of the company. We're very pleased to have Bozzetto's executive management team invest CAD 13.3 million of their proceeds alongside Aimia into this new investment venture, which represents a minority position of 6%. This investment provides for further alignment with Aimia and our shareholders.
Concurrent with the closing, we secured debt financing of CAD 139.5 million, with a weighted average coupon of 8.1% and total leverage will be roughly 3 times as we previously targeted.
Transaction costs and debt financing fees totaled CAD 19.1 million. Excluding the transaction costs of CAD 12.3 million and accounting for cash on hand of CAD 14.2 million, the enterprise value at closing was CAD 333 million, representing approximately 7 times fiscal 2022 pro forma adjusted EBITDA.
For the fiscal year 2022, Bozzetto reported revenue of CAD 320.6 million and adjusted EBITDA of CAD 45 million. Including the recent Levaco transaction that closed at the end of 2022, pro forma annual revenue was CAD 335.3 million and adjusted EBITDA was approximately CAD 47 million. Given the Bozzetto acquisition closed after this quarter ended, the results of Bozzetto have not been recorded in Aimia's financial statements for the quarter.
Bozzetto is one of the world's largest ESG focused providers of specialty chemicals. Through its innovative technologies, it is deeply interconnected with its clients' production process and allows for efficiencies and superior final product quality. Their focus on ESG formulations allows for a lower environmental impact on the entire value chain.
We're currently in advanced discussions with a potential target in the Americas, which would significantly increase and diversify Bozzetto's geographical and end market footprint, as well as give greater exposure to different trends, drivers and structural long term growth. We see significant opportunities to grow this business, both organically and through accretive acquisition.
On March 17, we closed the Tufropes transaction for CAD 239.2 million. Since the acquisition, the leadership team has met with two thirds of its top customers, spanning across Europe, North America and Asia, and the feedback has been exceptional.
During these discussions, the management team has uncovered many opportunities for further collaboration, both by gaining clients' wallet share, as well as evaluating new business opportunities, one of which is already underway. These opportunities are within general maritime and aquaculture and are both through our distribution channel as well as direct to client.
In addition, Tufropes is in discussions for a potential acquisition in the US within the high performance ropes industry. We'll report back at the proper time.
For the first quarter on a pro forma basis, Tufropes reported adjusted EBITDA of CAD 5 million on revenue of CAD 25 million. As previously disclosed, Tufropes expects adjusted EBITDA margins to grow to above 20% within the next two years based on its reasonable assumptions on operational improvement initiatives, as well as on the optimization of product mix. In the near term, with operational initiatives underway, we expect EBITDA margins to be in the range of 18% on a full year basis.
For the full fiscal year ending March 31, 2023, Tufropes achieved revenue of approximately CAD 114.3 million and adjusted EBITDA of CAD 20.7 million on a pro forma basis.
Fiscal 2023 revenues came in slightly below expectations due to a delay in shipments associated with the post-closing transaction, as well as the timing of customer orders, which are expected to be reversed over the next two quarters. As we previously discussed, we continue to explore debt financing for Tufropes, in line with our general strategy of reasonable leverage on our operating assets.
Moving on to Clear Media. Clear Media is seeing a sharp recovery in demand for its outdoor advertising displays, beginning in March, and has continued into the second quarter, as China has ended its mobility restrictions. And we expect Clear Media to rapidly accelerate their digital panel conversions in 2023.
Moving on to TRADE X. TRADE X generated gross vehicle sales of CAD 156.7 million in the quarter, down from CAD 248.3 million recorded in the same period last year, mainly the result of focusing its business away from being primarily volume focused and embracing its enhanced higher margin, asset light business model. The company will continue to benefit as the number of global car dealers utilizing its online trading platform grows.
TRADE X continues to streamline and innovate the process of cross border used car trading by announcing a strategic partnership with PAVE, allowing dealers globally to perform reliable vehicle inspections which ensures a trustworthy purchasing process and protects sellers from any condition disputes upon delivery.
Moving on to Kognitiv. In the first quarter, revenues from continuing operations were CAD 11.5 million. Adjusted EBITDA from continuing operations was a loss of CAD 5.6 million, a significant improvement of CAD 4 million from a loss of CAD 9.6 million in the prior year's quarter. We expect to see a continued reduction in losses as the year progresses and is expected to drive the company for its positive EBITDA by year end 2023.
We would also like to welcome Jon Ott, an executive with deep experience in enterprise sales, who was recently joined as Chief Revenue Officer at Kognitiv.
Next up is Capital A. Capital A, formerly AirAsia, continues to experience a strong rebound in all four of its businesses. In Q4 2022, Capital A recorded its first positive net profit since COVID began.
While revenue has grown substantially, it remains only 77% of the level it reached during Q4 2019. However, EBITDA is 108% of Q4 2019, due to better seat pricing and expense management. This was accomplished while only operating 56% of the 2019 fleet.
The group operated 14.8 million seats in the first quarter of 2023, which is 71% of first quarter 2019 levels, with a load factor of 89%, at par with pre-pandemic levels.
And with that, let me turn it over to Steve to take you through some of the financial results. Steve?
Thanks, Mike. Before I begin covering the consolidated financial results for the quarter, starting in the second quarter, we will be presenting our consolidated income statement as well as our segment reporting with a focus on the operating results of our new holdings in Bozzetto and Tufropes. Our goal is to provide additional clarity and insight into each of your holdings.
Let me now cover the consolidated results before we move to the segment performance and cash movements in the quarter.
Starting with our consolidated results, in the first quarter, income from investments was CAD 14.1 million compared to a loss of CAD 14.3 million last year. The income from investments in the quarter was mainly due to an increase in fair value of investments in equity instruments of CAD 10.8 million; interest, dividend and other investment income of CAD 7.2 million; and revenue of CAD 2 million, mainly associated with a 14-day stub holding period of Tufropes.
Our total expenses were CAD 33.2 million for the quarter, which included a number of non-recurring expenses. These include transaction costs of CAD 11.6 million, non-cash costs of CAD 10.8 million related to the Paladin carried interest and option rates, activism related costs of CAD 1 million and accelerated amortization of a MIM intangible asset for CAD 1.1 million.
Excluding these items, total expenses were CAD 7.3 million, of which CAD 3.4 million were related to the Tufropes business for the 14 day period held since acquisition, where we had no comparables versus the prior year. Accounting for all these items, total expenses were approximately CAD 4 million, which is in line with the prior year's quarter.
For the holding segment, corporate operating expenses were CAD 5.4 million in the quarter, up by CAD 1.3 million, mainly due to the expenses incurred related to the shareholder activism.
Moving on to cover the major cash movements for the quarter, we started the quarter with cash and cash equivalents of CAD 505 million. The main movements in the quarter were CAD 256 million used to fund the Tufropes acquisition. As a note, this funding was offset by working capital adjustments to derive our CAD 239 million net consideration. And it's been funded by the sellers by having liquid mutual fund securities of CAD 17 million, which are being converted to cash in the second quarter.
CAD 8.9 million of transaction costs were related to the Tufropes acquisition and CAD 4.7 million of holdco costs. We also had the CAD 3 million of dividends and the CAD 1.3 million Part VI tax.
Moving on to the pro forma unrestricted cash and liquid securities to reflect the Bozzetto acquisition as of March 31, 2023. We had CAD 318.6 million prior to the Bozzetto acquisition of cash and liquid securities, and we ended up funding CAD 206 million to acquire the 94% stake in Bozzetto. In turn, Bozzetto had CAD 14 million in cash on hand at closing. Taking these two cash movements into consideration, we estimate the pro forma cash and liquid investments of CAD 126 million post-closing.
This liquidity position provides sufficient cash and liquid resources to support the funding of our holdco as well as opportunities to support our businesses or renew the NCIB.
To conclude financing on Tufropes, we would expect up to CAD 100 million in additional liquidity.
And with that, let me turn it back over to Phil to wrap up with a few concluding remarks. Phil?
Thanks, Steve. Since the close of the PLM transaction last summer, we've been carefully planning to redeploy the proceeds to create value for our shareholders. We said at the time that we would return a portion of our capital directly to shareholders, as well as seeking opportunities to acquire established businesses with long track records of growth and free cash flow generation.
We reviewed a robust pipeline of potential targets around the world and narrowed our focus to the most compelling candidates. We knew we could act swiftly when presented with the right opportunities, and we did so with the recent acquisitions of Tufropes and Bozzetto.
We are very excited to have completed the purchase of these two businesses that check all of our boxes. Both companies are global players in growing markets with solid financial track record, sustainable competitive advantages, serving diverse customer bases, geographies and revenue streams, with proven management teams.
The Bozzetto and Tufropes investments will form the foundation of the "new Aimia," with plans to grow both organically and through carefully planned accretive acquisitions. We will continue to execute our strategy of maximizing the value of our current portfolio holdings while redeploying our capital into new investments with significant upside.
2023 is off to a strong start for our entire portfolio. And we look forward to providing you further updates as soon as we can. We look forward to a very exciting 2023.
Operator, that concludes today's prepared remarks. Please go ahead and prompt for questions.
[Operator Instructions]. First question we have, Surinder Thind with Jeffries.
A few questions here related to the portfolio holdings. I'd like to start with Tufropes. Can you provide any additional color on kind of what impacted the timing of customer orders? It sounded like it was a combination of customers waiting to feel the deal close, but was there other things here that we should consider in terms of what is the general outlook for the remainder of the year?
There were registration and licensing issues that we could only take care of after closing. So there was a lot of red tape involved. We also were redomiciling the company to Canada, which added a little additional complexity that caused shipment delays, which we expect to be pushed into the next few quarters. So those are the primary reasons for those issues.
At this point, should we assume that things are operating on a fully normalized basis?
Yes, we're fully normalized now.
In this environment, any color on what demand looks like?
We're seeing signs of strengthening demand. We're also more importantly seeing signs of opportunities that could have dramatic impacts on our EBITDA. So, we immediately were met with a potential joint venture opportunity with one of the largest distributors, which would be very meaningful. We're pursuing that.
As we mentioned, we met with most of the top customers, and many of them validated our thesis, which was that this company had not really been actively marketing their products around the world. So one of the customers said, well, we hadn't heard from you in two years, so glad you're here because we want to expand our relationships. So we're very excited about what we're seeing there.
So, overall, we're seeing the kind of demand that we expected, but we're finding opportunities to grow this materially outside of just organic growth. We're also pursuing, as you mentioned, an acquisition in the US, which would provide a whole another platform for us here and would also potentially allow us to utilize some of our US NOLs. So, we're pursuing that as well.
If I could just jump in a second, so just to expand on a little bit what Phil said, the discussions with both existing and new customers have been going extraordinarily well.
The future collaboration that we've been discussing has not only been on growing existing client wallet share, increasing business with existing clients, but also it's multifaceted, creating new opportunities and new products for those existing clients and through distributors creating products for new market. Alright? So, the largest of which is maritime and shipping customers. But it's really across the board. We're seeing opportunities that, through the due diligence process, we highlighted. And now that we're out there seeing 20, 30, 40 of the top customers, we are recognizing that not only are those opportunities that we highlighted in due diligence there, but there's a lot more as well.
And as Phil said, one of the opportunities is already ongoing and in the works, which is really exciting. And the research and development within the company is examining other ways to continue to participate with new clients as well as develop the new markets that we discussed.
Just related to that, in terms of – as you've identified these opportunities, as you have these discussions with the existing clientele for new opportunities, can you talk about the harvesting of that? Is the idea that we'll see the impact in 2024? Or should we begin to see the impact on growth before that?
Now we're anticipating – you'll be able to see growth before 2024. New product set will take a while to get through R&D and get through testing and certification, et cetera. But expanding current wallet share within customers, either direct to customer or distribution channels, we're looking to increase those relationships immediately. So that could be over the next several quarters.
Surinder, when we first announced this deal and our stock went down, one of the main things we were hearing was, this is a commodity business, you guys bought a commodity business. But that couldn't be further from the truth.
What you learn about this business is, which is pretty incredible, is that one net will hold up to CAD 20 million worth of fish. So you can imagine how important that net is to the person dragging it. So if a fish comes and bites a piece of the net off, CAD 20 million worth of fish can fly out of the window.
So, the quality of these nets is critical. And when we were diligent in this, what we heard from anonymous professionals, even the competitors, we're saying, look, Tufropes has some of the best product out there. There are competitors that white label it because their product is better than theirs. These are leaders in the industry. So, we went and visited every one of the factories. We saw women sitting on the floor with the nets. And my first reaction was why. You're so automated, you don't automate that? And they said, no, you don't understand, this is a skill set that is so valuable. Tying these nets at the end of these nets and the quality of these nets is the reason that they don't break. And it's the reason that our quality is so high, these are some of the highest paid women in India, highly skilled. And so, this is not like some simple thing where you're just making that.
So some of the technological advances Mike was referring to is putting sensors on the nets that alert the boat when there's a rip in the net or a tear or any type of damage to it. That allows you to maybe save CAD 14 million worth of the CAD 20 million that's going to escape. These are huge numbers. So it's a very important part of the business. And we're expanding it. And it's very high margin. And we're very excited about the future of that business.
Moving on to Clear Media here. We've now kind of had a quarter to two quarters where the Chinese economy has started to open up. Any color on how we should think about the revenue trajectory here and a return to normal, now that the conditions themselves or the factors influencing them have normalized?
I think, first of all, let me just say that the period that Clear Media went through over the past couple of years, I would almost look at it like you had the ability to do a prepackaged bankruptcy without a prepackaged bankruptcy. You could go and cancel bad contracts, you could improve terms. So it's actually been a very healthy process for them for the launching point they're at right now.
The same thing happened with Capital A. When they were going through their period in COVID, they basically went to people and said, look we're going to pullback unless you do A, B, and C, and they restructured their whole cost structure. And now, Capital A is triply as profitable as it was at the same time at the same load size they were back in 2019.
Clear Media has been by no means impaired. And in fact, the businesses and the structure and their deals have been enhanced over this period of time. So in terms of how quickly that launch proceeds, first of all, it will be more profitable, quicker because of the deals they had in place and because of unprofitable leases that were jettisoned, and others that were signed up. And remember, this new consortium now includes the Chinese government. So licensing becomes, you would imagine, more favorable and the ability to get things lined up for the digitization rollout.
When we first invested, and we invested CAD 75 million, we thought it was the perfect timing, it was the depths of COVID, we paid 5 times normalized EBITDA. So, the day we bought it for CAD 75 million, we thought it was worth CAD 150 million. Today, it's on our books for CAD 50 million because we've just been prudent, taking write downs, there's been currency over time.
When you saw the last from the first – the first time we bought it, it was a very, very quick snapback. It was recovering very quickly. And then the second wave of COVID hit and then the zero COVID policies enacted, so shut everything down. So we can't predict with precise timing how fast it recovers, except to say that right now they're seeing the strongest demand recovery to date. I think you're going to see a rapid recovery, and you're going to see a focus – an accelerated focus on digitizing the panels, which obviously increases revenue and profitability dramatically.
So very excited about that going forward, right partners, companies in a perfect position, economy and that businesses has now got a hurricane at its back, and we're very excited about it going forward.
Just with regards to timing, Surinder, you have to remember, when the moment mobility restrictions were lifted, it was December, January, as those lifted, it's been widely reported that the COVID outbreak substantially increased for the early part of the first quarter. And that kind of led people to kind of hunker down and to get through that period. So it was really only in March where we started to see normal activity, normal mobility, people getting back out, people getting back to work, and the marketing dollars will clearly follow that, and they have been.
There are current active marketing plans that are getting put back in place. And clearly, Clear Media is a huge beneficiary to that. So, the timing is, I would say, uncertain to get back to normal. But we're still certainly on a very, very strong project trajectory, starting in March and flowing through into the second quarter.
One or two more quick ones. Moving on to TRADE X here. When I think about the revenue profile and the transformation that the business has been going through, would you say that, on a run rate basis, that all else equal, platform sales have stabilized at this point?
I think just so everyone has a little background and I know we've touched on it, but just to kind of remind everybody, the TRADE X started last year full speed ahead, buy as much inventory as you can, limitless supply, limitless financing available, ramp up revenues as fast as you can, it was following the exact trajectory of an exciting tech play. They raised CAD 12.5 million and more than double the valuation. And they were targeting to raise there additional money and they were ramp – using all that money to load up on inventory, anticipating sales into these new quarters.
So, suddenly, the music stopped in the middle of the year, the tech funding just shut off for everybody. The used car market went through a pullback, everything kind of froze and TRADE X was forced to adjust their model. They had to go through a period of liquidating inventory, just refocusing their model on – no longer speculating. They wanted to get to a point where there – we had a proper credit facility in place which we now do, and focus on riskless transactions, transactions that are not relying on price moves, up or down.
So where we are today, after all of that change, and mentioned we have a new CEO starting, we have a COO who has been fantastic who's migrating to the CEO position on the first and Ryan is focusing on business development. And as such, we're seeing some very strong traction in Nigeria, for example, where we're seeing the highest margins we've ever seen there, and significant volume.
So in terms of normalization, we stopped focusing on volume, we focus on profitability, we got the right credit facility in place, we've got – we cut costs where necessary, it's a very asset light model now. We're 100% funded by the credit facility, transactions are only done when there's a buyer and seller and it's riskless for TRADE X. So that resulted in us getting to this kind of launching pattern, launching point, I think, at least from a revenue standpoint. The company is projecting a dramatic increase in those revenues. But we're much more concerned and focused on just maintaining profitability and growing it and we see a clear path there.
So I would say, definitely stabilized. Now focusing on growth, again, and the right type of growth, and we're very excited. And I think that they're on the right path now.
And any color on the new margin profile versus the old in terms of the differences in the business model?
We want to give a lot more color on these subsidiaries. I think we're trying to be prudent and let these kind of mature for a couple quarters before we start to give numbers. But I'll say, I'll say that, for example, in some of the territories we've opened, we're seeing margins as high as 20%. A significant increase from the type of margins we're seeing in just kind of like Canada, US, for example.
I think what's evolving here is a very specialized market that they've opened up that nobody else is transacting in. For example, Nigeria is a great example. Nigeria, people are paying as much as $450,000 for a G Wagen over in Nigeria. The process of getting a G Wagen into Nigeria is impossible almost for most people. But TRADE X spent a lot of time and money partnering with the right people in Nigeria, getting the proper government approvals and getting that window open to where they can now do significant volume there.
There was there was a cost to get there. There were some missteps. But they righted that, and I think the margins for us – Steve didn't believe them at first. And so, we were pretty stunned to see what they're doing. Hopefully, if they maintain that, we're going to have a very profitable company.
Next question, we have Brian Morrison with TD Securities.
Maybe I can just do a little bit higher level questions here. Just in terms of the closing of the acquisitions of Tufropes and Bozzetto, it sounds like all of your free cash flow from these acquisitions will go towards M&A. Will any of that be repatriated back to the parent company?
We'll do that as needed or if we want to, but our current plans are to grow these businesses and use the cash flows to continue to grow them. We have, as we mentioned, a couple of acquisitions, for example, that are underway, and both of those anticipate being 100% debt. But you never know. Going forward, there might be ones that require equity, there are some capital investment we're making to grow these businesses.
In the meantime, we plan on keeping the cash in the subs. Some of them are also restricted by debt covenants, as you know. So, there's periods of time where you can't take dividends even if you wanted to, but we're not planning to. So we're budgeting ourselves, so that we can spend a couple of years growing these businesses, keeping their internal cash flow there. And at the same time, have enough capital to aggressively buy back our stock and obviously maintain our other businesses and be available for other opportunities that may arise.
I want to get to your buyback in a minute. But can I just ask the question on Tufropes with respect to the status of the financing? Is it in process? Was it delayed because of the underperformance of Tufropes, the demographics, geographics, where it's located, maybe just update us on the status of the finance?
Well, there's no real underperformance with Tufropes. There was the delays that were associated with the closing, there was a period, for example, of two weeks where we weren't allowed to transact or buy or sell any product because we didn't have the proper licenses. So there's no concern about underperformance there. We're in very advanced discussions on that deal for Tufropes. I wouldn't be concerned about it.
I would just say that these companies and banks are committing to us and it's like a marriage. And they want to know who they're marrying. The activism stuff that came out was not helpful. Definitely delayed things a little bit. We've rectified that. And we're very confident that we'll close a transaction for Tufropes that is on our terms and the proper terms and we're not in the rush. We want to do it right. But we anticipate that being in the CAD 100 million range, and we're definitely confident that that will take place.
Phil, I'm actually using the wording out of your slide deck, in terms of the Tufropes and Bozzetto, can you just expand upon what your relationship is with Paladin?
I'm glad you asked because there's been a lot of misinformation out there about Paladin. I'd love to set the record straight. So, Paladin was referred to us by one of our board members, who has a long successful track record in private equity. He told us that he knew a group that had two deals under exclusivity that were exactly what we're looking for. But they had a non-compete until the time was April 1. And so, they couldn't raise any funds to finance these transactions. So they were left with two deals that they were likely going to lose and they fit the bill exactly.
When we met with them, they were very like-minded, very smart guy, long track record, primarily at Castle Harlan. Great history and track record of success in private equity deals. In effect, their two most successful deals happened to be in India, and in the chemical business in Europe. Their expertise was very valuable in those respects.
We went and did the diligence on these deals. We're very excited about them. We knew that these guys needed the capital for the deal. We think we made a great deal for Aimia. And there's been a lot of value add from Paladin since – first of all, they had been scouring the world for – part of their job is to scour the world for M&A opportunities for these acquisitions, which they've been doing. They brought us, I would say, at least five potential targets for each of these entities. They brought us – brought folks which had never been in the market. like, these are deals that – we're not out competing with Blackstone, we're not going into auctions, we had to find opportunities that Aimia could take advantage of that preferably other people didn't have access to.
Tufropes, they had spent almost three years courting the management of Tufropes to get them to sell. So this was a deal that wasn't available to the general market. They brought it to us, we jumped in on the seventh inning and we took advantage.
With Bozzetto, for example, Bozzetto was going to auction themselves. And then you saw the debt markets in Europe froze, you saw raw materials skyrocket, you saw fuel prices skyrocket, and it was pulled. And we saw that as an opportunity, swept right in, made a deal. I think we paid a lot less than they would have gotten otherwise. And even by the time we closed, things had stabilized. We had a competitive debt situation. We got a great deal there. Raw material prices have been dropping. Fuel prices have been dropping. The supply chain has stabilized.
The Paladin relationship is one that provided us these opportunities. They had these deals. The deal that we made with them was and is different than I think a lot of people interpret.
For starters, the fee that they get is nominal. They receive a fee of a few hundred thousand dollars a year per deal, though they have a long list of duties to help us with on those deals. And we're a small team. So, for example, we're not spending our time scouring every orifice of the world for M&A opportunities. They are. They've helped us a lot on the ground in India, bringing the right personnel in to help us with Tufropes. Their chemical expertise has helped us with Bozzetto. So they're doing a lot of service.
For such a small team – at Aimia, we're three people basically. It's almost like an extension of our management team at these holdings. They live and breathe these deals. They have the right, as we've said, to buy up to 20% of each. They can't cherry pick. They can't do one or the other. They can't do 12% of one and 18% of the other. It's all or nothing on both. So that's important that we're aligned that way.
If they do purchase that 20%, they pay us an 8% warehousing fee and they only have a year to do that. So we get paid 8% on that. And then they receive a carried interest of 20%, but only after we've receive an 8% compounded annual return. So, it's a very productive relationship. Very helpful to us. The value add they bring is very much worth the money we spent and would spend. And we're very excited about the relationship. And going forward, I think they're going to add a lot more value than they would cost us.
If I can turn to your cash position. It looks like you have CAD 50 million on hand pre-Tufropes financing, pre liquid assets. Should we expect to see some monetizations of your liquid assets near term?
And then, your NCIB, it's not going to get you to your CAD 100 million target. Just your thoughts on other potential return of capital to shareholders.
Once we close the Tufropes, that transaction, we'll be in the range of kind of CAD 250 million of available. Kind of when you talk about liquid investments, these are readily saleable securities, including Capital A. So, we're at CAD 200 million without reaching into some of those pockets. So, we're confident that we're going to have plenty of cash to execute when we need to execute. And yes, we will monetize those when the time is right. I think AirAsia, for example, Capital A has a lot of upside. So we want to let that run. We're not looking to be long term investors in airlines either. So, those are at the top of the list of liquidations. We shut down one of our SPVs.
You should expect us over time to be liquefying those type of investments and to be selling the minority stakes we own when the time is right and focusing on the cash flowing businesses and redeploying into that.
I think we've learned and the market has told us clearly that they don't want to value these minority investments. It's hard to because they don't have enough information. I don't blame them. And we don't need to focus our resources on opaque investments that people can't value. So, going forward, you're going to see us redeploying this capital into either deals that enhance and expand the current two businesses we just purchased, or you might see a third, but it will share the same characteristics and free cash flow generation that you're going to see from these two.
In terms of the buyback, we obviously think our stock is extremely undervalued, and we would like to aggressively buy it back, as rapidly and sizably as we can. I think the NCIB, which you mentioned, renews in June.
Beyond that, there are other buyback mechanisms we would employ. I think we've talked about return of capital, as long as the stock price is anywhere near where it is now, buybacks are far more preferable for us than dividends and to our stakeholders. So we're going to utilize this mechanism as quickly as we can and then we will focus on other mechanisms such as SIVs or direct issuer bids.
Thank you. And there are no further questions. I'll turn the call over for any closing remarks.
Thank you, everyone, for joining today's call and webcast. I wish you a great rest of the day. Thank you.
Ladies and gentleman, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.