Adamas Finance Asia Limited - Company Presentation Ticker: ADAM.LN
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Adamas Finance Asia Limited
Company Presentation Investment Manager
Ticker: ADAM.LN Harmony Capital Investors Limited
Exclusively focused on investing across Asia
May 2019
Our Strategy
Adamas Finance Asia is an AIM-quoted company targeting delivery of income and capital gain from a
diversified mix of pan-Asian investments in the SME1 Sector.
Pan-Asian Access Dividend Income Capital Gain
Providing investors access to Strategy developed with the Experience in sourcing
a range of high growth Asian intention to deliver regular investments with capital gain
economies dividend income to potential across asset classes
shareholders
USD Over
2.7 270
Trillion Million
Asian SME Funding Gap2 Number of Asian SMEs3
SMEs 90% 50% 2 out of 3
of Global Businesses4 of Global GDP4 Contribution to Global Jobs4
1 Small and Medium Sized Enterprises
2
MSME Finance Gap – SME Finance Forum, International Finance Corporation (2017)
3 Estimated number of small and medium-sized enterprises worldwide in 2010, by region – Statista (2018)
4 What We Do – SME Finance Forum, International Finance Corporation (2017)
May 2019 2
Our Market Opportunity
▪ We define SMEs as companies with less than USD500MM of Enterprise Value. The Organisation for Economic Co-operation
and Development (“OECD”) also defines them as firms with less than 200 employees 5.
▪ Limited access to bank financing can constrain the growth of Asian SMEs and in some cases lead to them failing altogether.
▪ In 2016, SMEs comprised more than 98% of Asian companies, accounting for 42% of Asia’s GDP whilst receiving only 18.7% of
bank lending 6.
▪ A significant financing gap of c.USD2.7 Trillion has developed in the SME sector in Asia7,8.
▪ The combination of the number of SMEs in the Asia region and the highlighted financing gap presents significant opportunities
for ADAM to deploy capital in the Asian SME Sector.
Number of SMEs by Region (Millions)9 Estimated SME Finance Gap by Region (USD Billions)10
3000 2,724
300 271
Largest SME Financing Gap
250 Largest Number of SMEs 2500
200 2000
150 1500 1,209
100 1000
62
40
50 20 21 500 331
20 76
0
0
Central Asia Middle East and Sub-Saharan High-income Asia
Asia
Middle East & Europe & Sub-Saharan Latin America Asia
Asia
and Eastern North Africa Africa OECD Countries
North Africa Central Asia Africa & Carribean
Europe
5
Small and Medium Sized Enterprises – OECD (2005)
6 Trade Finance Gaps, Growth and Jobs Survey – Asian Development Bank (2017)
7
The Role of SMEs in Asia’ Economic Growth – Asad Ata (2017)
8 Can Fintech Fill Asia- SME Lending Gap? – Sean Creehan (2016)
9 Estimated number of small and medium-sized enterprises worldwide in 2010, by region – Statista (2018)
10
MSME Finance Gap – SME Finance Forum (2017)
May 2019 3
Our Market Opportunity - Numerous Targets
▪ There were, as at September 2018, approximately 25,000 listed Asian companies with less than USD1 Billion of market
capitalisation 11. We estimate there are, at least, an equal number of privately held companies of similar size – thereby
offering a significant addressable universe of investment targets for ADAM.
Asian Public Companies by Market Cap Contribution 11 ADAM SME Target Features
8%
12% Enterprise Value ▪ USD5MM to USD500MM
▪ USD5M to USD500MM
Revenue
▪ Bias towards recurring revenues
80%
Profitability & ▪ Positive EBITDA/Cash Flows
Less than USD0.5Bn USD0.5Bn to USD1.0 Bn Greater than USD1.0 Bn Cash Flows ▪ Manageable CapEx
Number of Asian Companies by Market Cap11 Limited Financing ▪ Limited access to public markets
3,723 Sources and traditional bank debt
2,391
▪ While the above is indicative of the broad parameters
we seek in targets, our flexible investment policy is
one of our strongest advantages – allowing ADAM to
potentially invest in a wide array of Asian SME
24,099
opportunities.
Less than USD0.5Bn USD0.5Bn to USD1.0Bn Greater than USD1.0Bn
11 Bloomberg - September 2018
May 2019 4
Our Market Opportunity
▪ While ADAM remains sector agnostic, we have identified the following areas of interest for our investment activity.
▪ Supply constraints.
▪ Government focus on Clean Energy.
Energy and
Resources
▪ Asia is a global manufacturing hub. ▪ Growing middle class.
Consumer
▪ Local consumer drives demand. Industrials
& Leisure ▪ Demand for luxury goods, services and
experiences
Healthcare Adamas
▪ Aging population. & Life
Internet & ▪ Internet proliferation continues.
Finance Asia Technology
▪ Medical tourism. Sciences ▪ Fintech disrupting financial sector.
Property Education
▪ Hard asset backing. ▪ Significant share of household spending.
▪ Assessable income stream. ▪ Increased demand for private education.
Food and
Agriculture
▪ Increased protein consumption.
▪ Reduced supply of arable land.
May 2019 5
Our Footprint
▪ We provide investors with access to Asia.
Shareholders
London
Adamas Finance Asia Hong Kong
Limited
▪ Strategic Presence ▪ Asian Headquarters
▪ Quoted Investment Company ▪ Investment Team
▪ Main Investor Base ▪ Operations Management
Singapore
▪ SE Asia Presence
▪ Investment Team
An AIM-quoted company targeting delivery of income and capital gain from a diversified mix of pan-Asian investments in the
SME Sector.
May 2019 6
Our Strategy - Flexible Capital Solutions
▪ Our flexible investment policy enables us to evaluate opportunities across a spectrum of complexity.
Least Complex Level of Complexity Most Complex
To meet short term
liquidity needs
Bridge
Finance To provide re-
Typically for financing for
inorganic growth Acquisition maturing liabilities
to acquire a new Finance & Re-finance when bank
business or finance and
competitor Buyouts capital markets
are closed
Typically for
Good
organic growth,
companies with
such as additional Expansion Asian Rescue bad capital
plant capacity,
Capital SME Sector Finance structures in
capex upgrades
need of
and new product
rehabilitation
lines
May 2019 7Our Strategy - Structured Protection
▪ Investing across the capital structure of SME companies but with a preference for well-structured and downside-protected
investments.
▪ As Asian SMEs are increasingly starved of capital, we see increasing opportunities to negotiate and invest in structured
instruments.
Income +
Capital Gains
Security & Downside Amortisation & Early
Protection Return of Capital
Convertible Bond + Loan +
Covenants Warrants/Royalties
Structured
Covenants Provide Instruments Board/Monitoring
Ability to Influence Hybrid Rights
Preferred Equity +
Secured Loan
Governance
May 2019 8Our Investment Manager
▪ Harmony Capital is the Investment Manager to Adamas Finance Asia and is run with its own investment platform.
▪ The team is led by Suresh Withana, its Managing Partner and the firm has offices in London, Hong Kong and Singapore.
24 Years of
Experience 13 Years of Pan-Asian Special
Situations Investing
Dedicated Asian Focus
with a Global Perspective
Investment Experience
Mizuho International PLC Harmony Investment Fund I 1998 Asian Financial Crisis
c.USD450MM Global Portfolio c.USD270MM Asia Portfolio 2003 US/Europe Recession
3 Yr Life Positive Return 10 Yr Life Positive Return 2009 Global Financial Crisis
2010 European Sovereign Crisis
▪ Senior members of the team have successfully navigated various financial crises across the globe and over the past 20 years.
▪ Since 2005, Harmony Capital managed a private pan-Asian focussed SME fund for investors including Asian Institutional
Investors, North American Pension Plans and Family Offices – the fund invested in middle-market companies in South East Asia,
China and Australia.
▪ Prior to founding Harmony Capital, Suresh worked for Bank of America, Merrill Lynch, Mizuho International PLC and Tikehau
Capital.
May 2019 9Our Investment Manager - Approach
▪ Harmony Capital develops investment ideas through its extensive network of relationships within Asia.
▪ The Harmony Capital Team provides on the ground access to proprietary relationships and serves as a powerful filter for
‘non-shopped’ opportunities.
Investment Filters Investment Filters
Pan-Asia Investible Universe
Estimated Enterprise Values of
Pan-Asia Targetable SME Companies USD5MM–to USD500MM
Healthcare & Life Sciences, Selected Sectors Property, Internet & Technology,
Consumer & Retail, Industrials Education, Food and Agriculture
Special Situations
Expansion Capital, Bridge Leadership Transition within
Finance, Re-finance family, Industry Consolidation
Proprietary Access &
Origination
Strong fit and value-adding Exclusive Opportunities
opportunities Sustainable
Exclusivity
Deal structure and exit
Due Diligence and Valuation evaluation
Negotiations
Invest
May 2019 10Our Key Metrics12
Net Asset Value Operating Gain/Loss
20.0
+17% 10.0
0.0
100.0 93.6 95.0
-10.0 FY2016 Interim 2017 FY2017 Interim 2018
90.0 (Unaudited)
77.9 -20.0
80.0 76.8
-30.0
70.0 -40.0
60.0
50.0 ▪ Stricter governance and control measures implemented by
40.0 Harmony Capital and the Board since May 2017.
▪ Significant due diligence is undertaken by the Investment
30.0
Manager on opportunities to reduce risk.
20.0
10.0
Portfolio Diversification
0.0
FY2016 Interim 2017 FY2017 Interim 2018
(Unaudited)
Appointment of Harmony Capital
▪ Harmony Capital has substantially completed the
restructuring of its inherited portfolio. 31 Dec 2016 PF 30 June 201813
▪ ADAM continues to build a diversified portfolio of exciting
pan-Asian investments.
12 Extracted from audited results for FYEs 2016 and 2017 and unaudited interims for HY 30 June
2017 and 2018. China Malaysia Cash China Hong Kong Singapore
13 Pro Forma (“PF”) 15
14
14 This investment has been approved and capital is committed. The draw down of funds by the Japan Cash
borrower is imminent. ▪ Our Portfolio has re-positioned significantly.
15 The cash balance at PF 30 June 2018 includes USD3.0MM which was received in July 2018.
May 2019 11Our Portfolio - Selected Investments
Infinity Capital Group 2018 – ADAM invested in Infinity Capital Group, the developer of a high-end
A Developer of Premium Residential
development project in Niseko, Japan – a world-class skiing destination
Projects
An attractive transaction: Domicile: Japan Property
Status: Private
✓ Ability to benefit from the rising popularity of winter tourism in
Sector: Lodging and Leisure
Niseko, Japan due to its reputation as a world-class ski destination
Quarterly and Annual Reporting
and its proximity to major Asian cities.16
Governance: Monthly Interaction with
✓ Investment proceeds are secured against significant collateral with a Management
conservative ‘Loan to Value’ ratio. Use of
Business Expansion
✓ We believe that the high-end residential developments of Infinity Proceeds:
Capital Group will appeal to Asia’s prospering middle class as their Investment
Secured Loan + Warrants
propensity to spend on luxury goods and travel increases. Type:
17.5% p.a. payable semi-annually
Interest Rate:
in cash
Security: 1st Ranking Asset Pledge
Investment
USD4.0MM
Amount:
Target Exit: 2024, Repayment at Maturity
This investment provides ADAM exposure to the rapidly growing
Asian winter tourism market and further diversifies its portfolio.
16 Taking the Piste – Travel Daily Media (2018)
May 2019 12Our Portfolio - Selected Investments
PharmaJet Inc 2019 – ADAM proposed an investment in PharmaJet Inc, a leading producer of
A Leading Producer of Innovative
needle-free injectors which have received US FDA clearance and EU CE
Medical Devices
certification
Healthcare
An attractive transaction: Domicile: Singapore & Life
Sciences
Status: Private
✓ World Health Organisation prequalified and listed product and cited
Sector: Medical Devices
by UNICEF as revolutionising how vaccines are delivered.17,18
Board Seat
✓ It has recently signed a distribution agreement with Mundipharma, a Governance:
Quarterly and Annual Reporting
global medicine and medical devices distributor, expanding its Use of
coverage to over 120 countries across 6 continents. Business Expansion
Proceeds:
✓ Exit plans include an IPO on the Singapore Stock Exchange by 2020 Investment
Convertible Bond
followed by a migration to the NASDAQ by 2022. Type:
Interest Rate: 6.0% p.a. cash & 4.0% p.a. PIK
40.0% Discount to a Pre-Money
Conversion: Valuation Established by any
Liquidity Event
Security: Not Publicly Disclosed
Investment USD5.0MM
Amount: (USD12-20MM Issue Size)
Target Exit: 2021, Singapore/NASDAQ IPO
This investment enables ADAM to participate in the growth of an
17 PQS Catalogue – WHO (2018)
18 6 Ways the Fight Against Polio Is Transforming Global Health – UNICEF
established brand in the medical devices space.
USA (2017)
May 2019 13Our Portfolio - A Summary19
31 December 2016 31 December 2017 PF 30 June 201820
Legacy
Cash Investments
Cash
USD1.3MM (1.7%) USD13.2MM USD11.4MM
(14.1%) Cash (12.0%)
USD8.8MM
USD3.0MM (9.3%)
(3.2%) DocDoc
HK Mining
Total NAV Total NAV USD2.0MM Total NAV
USD39.4MM HK Mining
USD77.9MM USD93.6MM (2.1%) USD95.0MM
(42.1%) USD42.3MM
ICG21 (Unaudited)
(44.5%)
USD4.0MM
Legacy Legacy (4.2%)
Investments Investments Fook Lam Moon
USD76.6MM (98.3%) USD38.0MM USD26.5MM
(40.6%) (27.9%)
Legacy Investments Cash Restructured Positions Legacy Investments Restructured Positions Fook Lam Moon
22
Receivables Cash Infinity Capital Group DocDoc
23
Cash Legacy Investments
▪ Harmony Capital has disposed of investments which do not fit ADAM’s investment objectives whilst increasing ownership in
valuable assets where the opportunity has presented itself.
▪ ADAM is now focused on building an income generating portfolio with a focus on consumption driven industries in Asia.
19 Extracted from audited results for FYEs 2016 and 2017 and unaudited interims for HY 30 June 2017 and 2018.
20 Pro Forma (“PF”)
21 Infinity Capital Group (“ICG”)
22 This investment has been approved and capital is committed. The draw down of funds by the borrower is imminent.
23 The cash balance at PF 30 June 2018 includes USD3.0MM which was received in July 2018.
May 2019 14Our Portfolio - A Summary
An AIM-quoted company targeting delivery of income and capital gain from a diversified mix of pan-Asian investments in the
SME Sector. USD95.0MM NAV
DocDoc 2.0
DocDoc - In March 2018, ADAM invested in DocDoc, a leading pan-Asian virtual network of ICG 4.0
physicians, clinics and hospitals assisting patients in finding the highest quality of medical care PharmaJet Inc 5.0
at the best prices.
Cash25 3.8
Infinity Capital Group (“ICG”)24 – A senior secured loan investment in a real estate developer of
luxury residential properties in one of Asia’s premier ski destination – Niseko, Japan. Fook Lam
26.5
Moon
PharmaJet Inc – A proposed convertible bond investment in PharmaJet Inc, a leading producer
of needle-free injectors which have received US FDA clearance and EU CE certification.
Fook Lam Moon - A convertible bond issued to ADAM by a high-end Hong Kong-based food and
beverage business.
HKMH 42.3
Hong Kong Mining Holdings - ADAM is the majority shareholder of Hong Kong Mining
Holdings, which wholly owns the largest magnesium dolomite mine in Shanxi Province, China.
Legacy Investments - ADAM’s Legacy Investments include our Limited Partnership Interest in
the Greater China Credit Fund and our investment in Meize Energy Industrial Holdings. Legacy
11.4
Investments
24 Thisinvestment has been approved and capital is committed. The draw down of funds by the borrower is imminent. PF 30 June 2018
25 The cash balance at PF 30 June 2018 includes USD3.0MM which was received in July 2018. (Unaudited)26
26 Pro Forma (“PF”)
May 2019 15Our Board
An AIM-quoted company targeting delivery of income and capital gain from a diversified mix of pan-Asian investments in the
SME Sector.
John Croft is an experienced director of AIM-quoted companies and has
John Croft
previously worked in executive and non-executive capacities with a number of
Non-executive Chairman
fast growth companies in the technology and financial services sectors.
Hugh Trenchard began his career at Kleinwort Benson in 1973 and has more
Hugh Trenchard
than 40 years' experience in investment banking, including 35 years of
Non-executive Director
involvement with Japan and 12 of them as a resident.
Ernest Wong has over 20 years of experience in venture capital, corporate
Ernest Wong Yiu Kit
finance, business development, legal, IT, financial and general management.
Non-executive Director
Currently he is the President and Group CFO of KVB Kunlun Holdings Limited.
Dr. Lee George Lam is the Chairman of Hong Kong Cyberport Management
Dr. Lee George Lam
Company Limited and the Non-Executive Chairman of Macquarie Bank’s
Non-executive Director
Infrastructure and Real Assets business in the Hong Kong and ASEAN region.
May 2019 16Disclaimer
An AIM-quoted company targeting delivery of income and capital gain from a diversified mix of pan-Asian investments in the
SME Sector.
This Document comprises an institutional presentation (the “Presentation”) which has been prepared by and is the sole responsibility of Adamas Finance Asia Limited (the “Company”). The content
of this Presentation has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000, as amended (“FSMA”). Reliance on this Presentation for the
purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. This Presentation does not constitute or form part
of any offer for sale or solicitation of any offer to buy or subscribe for any securities nor shall it or any part of it form the basis of or be
relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever or constitute an invitation or inducement to engage in investment activity under
section 21 of FSMA.
Notwithstanding the above, in the United Kingdom, this Presentation is only being given to persons reasonably believed by the Company to be investment professionals within the meaning of
paragraph (5) of Article 19 of the FMSA (Financial Promotion) Order 2005 (SI 2005/1529) (“FMSA Order”) or to be high net worth companies or unincorporated associations within the meaning of
paragraph (2) of Article 49 of the FMSA Order or to be persons to whom it may otherwise be lawful to distribute it. If you are not such a person (i) you should not
have received this Presentation and (ii) please return this Presentation to the Company's registered office as soon as possible and take no other action. By accepting this Presentation the recipient
represents and warrants that they are a person who falls within the above description of persons entitled to receive this Presentation.
This Presentation and its contents are confidential. It must not be distributed or passed on, directly or indirectly, to any other person or class of persons. This Presentation is being supplied to you
solely for your information and may not be reproduced, further distributed or published in whole or in part by any other person and under no circumstances should persons of any other
description rely or act upon the contents of this Presentation.
No representation or warranty, expressed or implied, is made or given by or on behalf of the Company or any of their respective parent or subsidiary undertakings or the subsidiary undertakings of
any such parent undertakings or any of the directors, officers or employees of any such person as to the accuracy, completeness or fairness of the information or opinions contained in this
Presentation and no responsibility or liability is accepted by any person for such information or opinions. No person has been authorised to give any information or make any representations other
than those contained in this Presentation and, if given and/or made, such information or representations must not be relied upon as having been so authorised. The contents of this Presentation
are not to be construed as legal, financial or tax advice.
The Company has not been, and will not be, registered under the United States Investment Company Act of 1940, as amended, and investors will not be entitled to the benefits of that Act. Neither
this Presentation nor any copy of it may be taken or transmitted into the United States of America or its territories or possessions (the “United States”), or distributed, directly or indirectly, in the
United States, or to any U.S Person as defined in Regulation S under the United States Of America Securities Act 1933, as amended, including U.S resident
corporations or other entities organised under the laws of the United States or any state thereof or non-U.S branches or agencies of such corporations or entities. Neither this Presentation nor any
copy of it may be taken or transmitted into or distributed in Canada, Australia, Japan, South Africa or the Republic of Ireland, or any other jurisdiction which prohibits the same except in compliance
with applicable securities laws. Any failure to comply with this restriction may constitute a violation of United States or other national
securities law.
Information contained in this Presentation may include 'forward-looking statements'. All statements other than statements of historical facts included herein, including, without limitation, those
regarding the Company's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company's
business) are forward-looking statements. Such forward-looking statements are based on a number of assumptions regarding the Company's present and future business strategies and the
environment in which the Company expects to operate in future. Actual results may vary materially from the results anticipated by these forward-looking statements as a result of a variety of
factors. These forward-looking statements speak only as to the date of this Presentation and cannot be relied upon as a guide to future performance. The Company expressly disclaims any
obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this Presentation to reflect any changes in its expectations with regard thereto or
any change in events, conditions or circumstances on which any statement is based.
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