Adamas Finance Asia Limited - Investor Presentation 2020
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Adamas Finance Asia Limited
Investor Presentation
2020
The London listed company focused on providing shareholders with attractive uncorrelated risk
adjusted returns from a diversified portfolio of pan-Asian investments
Disclaimer
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.
2
Contents & Presentation Team
Contents Presentation Team
Page 4 – Company Overview
Page 5 – Compelling Investment Case
Page 6 - 8 – Recent Updates
John Croft
Executive Chairman
Page 9 – Key Performance Metrics
Adamas Finance Asia
Page 10 – The COVID-19 Pandemic Effect
Page 11 – Differentiation and Added Value Across Three Key Areas
Page 12 – Investment Manager Expertise: Harmony Capital
• Experienced director of AIM-quoted companies via executive and
non-executive capacities
Page 13 – Significant Market Opportunity
• Sector track record working with a number of fast growth
Page 14 – Asian SME Demand for Growth Financing
companies in technology and financial services
Page 15 – Sourcing: ADAM’s established advantage
Page 16 – Our Investment Process
Page 17 – Our Growth Sector Focus
Page 18 – Our Strategy
Page 19 – Structured Protection Suresh Withana
Page 20 – Our Office and Portfolio Footprint Managing Partner
Page 21 - 23 – Our Portfolio - Selected Investments Harmony Capital Investors
Page 24 – Investment Pipeline • Founder and lead at investment manager
Page 25 – ADAM: Competitive Advantages & Outlook • 25 years’ experience in investing and investment banking
Page 26 – Appendix • The past 17 years of which focused on Pan-Asian investments
Page 27 – Key Terms • Inhouse experience with Bank of America, Merrill Lynch, Mizuho
Page 28 – Financials International Plc and Tikehau Capital
Page 29 – Our Portfolio
Page 30 – The Board
3
Company Overview
London listed company focused on providing shareholders with attractive uncorrelated long term risk adjusted returns
Who We Are from a diversified portfolio of pan-Asian investments
Provide growth capital and financing to emerging and established Small and Medium Enterprises (SMEs) throughout
Strategy Asia, well diversified by national geographies, instruments and asset classes
Attractive Income &
Dedicated to delivering attractive income and capital growth for shareholders
Capital Growth
Rigorous due diligence and disciplined risk management, with downside protection through selectively investing in
Robust Risk Management assets and proactively managing them
Harmony Capital, the investment manager, has an established tracked record of generating excess returns throughout
Track Record market cycles across the globe for the past 20+ years, with a focus on Asian special situations for 17+ years
Sourcing private opportunities with a strong pipeline of income generation, focusing on growth sectors across Asia,
Growth Sector Focus including healthcare, fintech, hospitality, IT and property
Governance The four experienced and independent directors comprising the Company’s Board provide strong governance
4
Compelling Investment Case
The London listed company focused on providing shareholders with attractive uncorrelated risk adjusted returns over the
Investment Policy short and longer term from a diversified portfolio of pan-Asian investments
Discount to NAV The Company’s share price is currently trading at a + 60% discount to NAV
Supportive Majority
55% majority shareholder, supportive long-term holder since 2014 and has not sold any shares
Shareholder
Future Metal Holdings (44.39% of ADAM’s last reported NAV), a Chinese dolomite quarry, has commenced production.1 In
Largest Investment December 2019, the quarry produced 10-20.0k tonnes of dolomite and wall rock and sold these materials during the initial
trial run of the plant. The asset is valued at US$44.7m (at 31 December 2019).
Established Investment The Company's investment manager, Harmony Capital, seeks to capitalise on its team’s established investment expertise and
Expertise and Networks broad networks and offices across Asia, with rigorous diligence and disciplined risk management
Over 250 million Asian SMEs with limited access to traditional bank financing, US$2.7 trillion funding gap (IFC), leading to
Market Opportunity significant opportunities to deploy capital selectively in this vital segment of the economy
Harmony Capital: established track record of successfully executing and exiting investments throughout market cycles;
Established Advantage continuing to create strong pipeline of attractive income generating assets with capital growth potential for shareholders
1 31 December 2019 NAV
5
Recent Updates
End-of-Year Financial Results Corporate Bond Issuance
▪ Since 2018, the Company’s Net Asset Value increased by 8% driven ▪ On 21 October 2019, ADAM announced it had successfully raised
mostly by a new investment which was acquired in exchange for the gross proceeds of approximately US$1.9million through the
issue of the Company’s shares. issuance of a US Dollar-denominated corporate bond to family
▪ Portfolio income increased by over 500% to US$2.2m year-on-year offices in the Middle East (the "Corporate Bond"), representing the
due to the continued repositioning of the portfolio, a trend that is first close of a corporate bond issuance programme of up to US$10
expected to continue in 2020 as new investments are made and million.
where ADAM expects to monetise some of its older investments. ▪ In May 2020, ADAM successfully secured a second subscription of
This leaves the Company closer to a point where it can consider a US$1.7million from high net worth individuals and family offices in
sustainable dividend policy. the Middle East. The Company has raised a combined total of
▪ Net loss reduced by 21% year-on-year driven largely by a significant approximately US$3.6million to date.
increase in Portfolio income which offset operational costs of the ▪ This Corporate Bond, which matures in October 2022, has a cash
business. coupon with an interest rate of 12.5% per annum payable semi-
▪ The COVID-19 pandemic continues to create global uncertainty, but annually and is secured with a fixed and floating charge on the
the Company remains relatively well positioned given its resilient corporate assets of the Company. The Company reserves the right
and diversified portfolio and strong liquidity position. In addition, all to change the terms of any future corporate bond issuance.
the Company's investments have business continuity procedures
and protocols in place to effectively mitigate the impact of the virus
pandemic.
▪ The Company is also seeing an increasingly attractive and growing
pipeline of investment opportunities in emerging and established
small and medium sized enterprises across Asia, which are even
more starved of capital, a situation that is accelerating due to the
impact of this global pandemic. 6
Recent Updates
Share Buyback Infinity Capital Group Shareholding in ADAM
▪ On 23 December 2019, the Company purchased 2,400,000 ▪ On 15 November 2019, Infinity Capital Group became a 15.4%
existing Ordinary Shares of no par value in the capital of the shareholder of the Company via a Share Purchase Agreement
Company at a price of USD 0.21 per Ordinary Share, representing completed at a consideration share price of US$0.45
an aggregate purchase price of US$0.5m (the "Share Buyback"). representing a 20% premium to the 30-day weighted average
ADAM bought these shares on-market using existing cash price per share in ADAM.
reserves aiming to avoid the potential continuation of an on-
market overhang which it believes was created recently by the
seller of this block.
▪ The Company understands that the selling pressure from this
shareholder was driven by non-market considerations and that
this purchase comprises the entire holdings of this shareholder.
▪ A portion of these shares will be held in treasury by the Company,
whilst an allocation of the remaining shares with a syndicate of
third-party investors was successfully completed on 3 March
2020.
7
Recent Updates
Commencement of Production at Future Metal Holdings Limited
▪ On 27 December 2019, production commenced at ADAM’s core asset, Future
Metal Holdings Limited. With the installation of the quarry's processing line, the
processing plant’s initial run was successfully conducted, and the first sales
contract was entered into with others expected to follow in Q1 2020. Further
ramping up of production commenced in the third week of December 2019.
▪ The operation continued until late January 2020 before the Chinese New Year
with an estimated total production amount of 15,000 tonnes.
▪ As a result of the restrictions imposed by the local Government in order to
contain the COVID-19 pandemic, in February and early March 2020, the
operations of the quarry were temporarily halted. While this was a legal
requirement, local management had originally planned for limited production in
this period due to traditionally adverse winter weather conditions at the
beginning of the year. In line with wide-ranging industrial activity in China, the
quarry resumed operations in mid-March 2020. The local management team is
actively pursuing sales orders from domestic construction companies who have
all commenced operations.
8
Key Performance Metrics
▪ 2019 NAV increased to US$100.9m (2018: US$93.0m) as a result of the share swap ▪ Net loss decreased by 21% to US$2.8m (2018: US$3.5m)
with Infinity TNP. As of 1Q 2020, NAV is US$100.7m with the marginal decrease
▪ A US$0.5m Share Buyback Programme was implemented to improve the
occurring as a result of an increase in operating expenses incurred at the beginning of
2020. liquidity of shares
▪ 2019 Gross income generated from the portfolio increased by over 500% to US$2.2m ▪ 2019 Cash of US$4.1m (2018: US$8.8m)
(2018: US$0.4m), a trend that is expected to continue in 2020 as new investments ▪ 2019 NAV per share of US$0.95 (2018: US$1.13)
are made and where the Company expects to monetise some of its older
investments. This leaves the Company closer to a point where it can consider a
sustainable dividend policy.
Net Asset Value Gross Portfolio Income
US$ MM US$ MM
+31%
3
FY2016
120
100.9 100.7 2.2
93.6 95.0 96.7
100 93.0
2
76.8
80
60 1.2
1
40
0.4
20
0.1
0 0
Interim 2017 FY2017 Interim 2018 FY2018 Interim 2019 FY2019 1Q 2020 Interim 2017 FY2017 Interim 2018 FY2018 Interim 2019 FY2019
Harmony Capital Harmony Capital
Appointed Appointed
9
The COVID-19 Pandemic Effect
Impact of the COVID-19 Pandemic on Current Operations Risk Management and Opportunities
▪ The Company’s primary focus remains the health, safety and wellbeing of ▪ Asian countries generally have benefited from the experiences gained
our people and stakeholders, whilst working hard to ensure that the from previous pandemics such as Bird Flu and SARS and this resulted in far
Company’s financial position remains robust over the long-term and the quicker changes to behaviours and travel restrictions than was the case in
value of the business and its investment portfolio is protected. the West.
▪ The COVID-19 pandemic continues to create global uncertainty, but the ▪ All the Company's investments have business continuity procedures and
Company remains relatively well positioned given its resilient and protocols in place to effectively mitigate the impact of virus pandemic.
diversified portfolio of pan-Asian investments and strong liquidity Harmony Capital continues to be in constant communication with all of
position. The Board draws further comfort from the established its portfolio companies and business partners.
investment expertise and relationships across Asia of Harmony Capital,
▪ Through Harmony Capital, the Company is also seeing an increasingly
the Company’s Investment Manager.
attractive and growing pipeline of investment opportunities in emerging
▪ Whilst the markets in which the Company’s portfolio companies operate and established small and medium sized enterprises across Asia, which
have been affected by the pandemic to varying degrees, many of these are even more starved of capital, a situation that is accelerating due to the
countries, including China and Hong Kong, are exhibiting early signs of impact of the global pandemic.
recovery with the gradual lifting of lock-down measurers.
Outlook
▪ In 2020, the Board anticipates that income from the portfolio will
continue to increase bringing ADAM nearer to commencing dividend
payments.
▪ The Board remains confident in the outlook for the business and of
delivering value to ADAM’s shareholders over the short and longer term.
▪ The Company is continuing to monitor closely the impact of COVID-19 and
will keep shareholders updated on any material developments that affect
the Group as the situation evolves.
10Differentiation and Added Value Across Three Key Areas
Experienced Robust Risk Management Process
▪ Established, value-oriented, income focused pan-Asian SME ▪ Investment manager has +6 dedicated employees in operations and
investor risk management
▪ Senior investment team averages +20 years of relevant experience ▪ Offices: London, Hong Kong & Singapore, on-the-ground local teams
▪ Complementary skill sets and deep industry expertise ▪ Supplement traditional risk management with advanced portfolio
▪ History of generating excess returns throughout market cycles analytical tools
▪ Extensive financial structuring experience with significant downside ▪ Proactive rigorous diligence & disciplined risk management
protection from investments processes
▪ Established ability to successfully execute and exit investments ▪ Evaluate risk across both portfolio and individual
investment/growth capital data
▪ Track growth capital-level performance across life of investment
Diverse Portfolio and Pipeline of Attractive Investments
▪ Portfolio of seven investments across four countries
▪ Proactive and selective sourcing of deals with teams that have the
talent, passion and grit to succeed
▪ Non-sponsored, self-originated and primarily private investments
▪ Investments typically structured with over collateralisation and
credit enhancements to minimise risk of loss
▪ Well-structured and downside-protected investments
11Investment Manager Expertise: Harmony Capital
The Company’s investment manager is Harmony Capital, an
established private capital manager with offices in London, Hong
Kong and Singapore that has a history of generating excess
returns throughout market cycles. 25 Years of Professional Experience
Through rigorous diligence and disciplined risk management, Prior to founding Harmony Capital, Mr. Withana worked
Harmony Capital is dedicated to delivering attractive income and for Bank of America, Merrill Lynch, Mizuho International
capital growth for shareholders with significant downside
protection through selectively investing in assets and proactively Plc and Tikehau Capital
managing them.
Since being established by Suresh Withana in 2005, Harmony
Capital managed a private pan-Asian focused SME fund for
sophisticated investors diversified geographically and 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.
Today, Harmony Capital manages a pan-Asian focused SME fund
17 Years of Pan-Asian Investing Experience
for its client, London-quoted permanent capital vehicle, Adamas Harmony Capital c.US$100m Asia Portfolio
Finance Asia. The fund provides growth capital and financing to Harmony Investment Fund I c.US$270m Asia Portfolio
SMEs, which are underserved by traditional bank financing and
maintains diverse exposure throughout Asian geographies, 10 Yr Life Positive Returns
utilising varied instruments across assorted asset classes. Mizuho International Plc c.US$450m Global Portfolio
3 Yr Life Positive Returns
12Significant Market Opportunity
There is a funding gap of c.US$3 trillion across Asia SMEs2 Opportunity
Asian SMEs are attractive investments with built in collateral and downside protection Demand
There are over 270 million Asian SMEs, making up 98% of Asian companies3,4 Market
Pan-Asian SME’s account for 42% of Asia’s GDP and only receive 18.7% of lending via traditional institutions4 Growth
Traditional institutions restricted for regulatory and structural reasons; SMEs seek growth capital from alternative finance providers Returns
Significant opportunities to invest selectively in high growth SMEs in Asia and proactively manage them
2 MSME Finance Gap – SME Finance Forum (2017)
3
Estimated number of small and medium-sized enterprises worldwide in 2010, by region – Statista (2018)
4 Trade Finance Gaps, Growth and Jobs Survey – Asian Development Bank (2017)
13Asian SME Demand for Growth Financing
ADAM SME Target Features
Enterprise Value US$5m-500m ▪ ADAM can invest across the capital structure of SME companies
with a strong preference for well-structured and downside-
Revenue US$5m-500m protected investments
Profitability & Cash Flows Positive EBITDA; Manageable CapEx ▪ As Asian SMEs are increasingly starved of capital, ADAM sees
increasing opportunities to negotiate and invest in well structured
Restricted access to public markets instruments
Limited Financing Sources
and traditional bank debt
Structured Investments
FOR HOW WHY
Expansion Capital Convertible Bonds Income + Capital Gains
Acquisition Finance & Buyouts High Yielding Secured Loans Downside Protection
Bridge Finance Loans + Warrants Return of Capital
Re-Finance Preferred Equity Accountability
Rescue Finance Governance
14Sourcing: ADAM’s Established Advantage
Historical Asian SME Investments
▪ As an established firm with investment expertise and broad networks
and offices across Asia, Harmony Capital has an extensive and deep
network of relationships and a robust pipeline in this growing, but
fragmented, industry where proprietary relationships are key to
gaining access and serve as a powerful filter of opportunities.
▪ Harmony Capital:
• has a disciplined deal origination process that has generated more than 30
qualified investment opportunities across Asia over the last 14 years
• screens potential portfolio companies based on various criteria including Current Asian SME Investments
management growth strategy, robust financials and market opportunity
• has extensive reach and ability to meet with management teams, attend
conferences and diligence opportunities
▪ Through Harmony Capital’s local offices, it can originate proprietary
transactions and negotiate attractive transaction terms directly with
companies, instead of competing in a wide auction process.
15Our Investment Process
Harmony Capital follows a multi-phase due diligence process once a potential investment is identified
Estimated Enterprise Values of Asian SME
US$5m to US$500m
Investment Filter Risk Factors
Healthcare & Life Sciences, Sector Cyclical Sectors
Consumer & Retail, Industrials
Expansion Capital, Bridge Special Situations Lack of Adequate Security
Finance, Re-finance
Strong fit and value-adding Proprietary Access & Origination Shopped Opportunities
opportunities
Exclusive Opportunities
Sustainable Exclusivity Participating via Third Parties
Deal structure and exit Negotiation Rushed Timeline
evaluation
As a result of Harmony Capital’s thoroughness throughout the due diligence process,
Invest over 100 SMEs were analysed in 2019, however, only 2 companies achieved
investment.
16Our Growth Sector Focus
While ADAM remains sector agonistic, Harmony Capital has identified certain sectors in Asia that continue to be attractive based on
experience in those specific sectors and where the team’s knowledge and contacts are deepest
▪ Supply constraints
▪ Government focus on Clean Energy
Energy and
Resources
▪ Asia is a global manufacturing hub ▪ Growing middle class
▪ Local consumer drives demand Industrials
Consumer & ▪ Demand for luxury goods, services and experiences
Leisure
▪ Healthcare
Aging population
& Life
Adamas Internet & ▪ Internet proliferation continues
▪ Medical tourism Sciences Finance Asia Technology ▪ Fintech disrupting financial sector
Property Education ▪ Significant share of household spending
▪ Hard asset backing ▪ Increased demand for private education
▪ Assessable income stream
Food and
Agriculture
▪ Increased protein consumption
▪ Reduced supply of arable land 17Our Strategy
Our flexible investment policy enables us to evaluate opportunities across a spectrum of complexity
To meet short term
liquidity needs
Bridge
Finance
Acquisition
Typically for To provide
Finance & Re-finance
inorganic growth re-financing needs
Buyouts
To rehabilitate
Typically for Expansion Asian Rescue good firms in
organic growth Capital SME Sector Finance distressed
situations
18Structured Protection
Investing across the capital structure of pan-Asian SME companies, 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 + Warrants/Royalties
Covenants
Structured
Instruments Board/Monitoring
Covenants Provide
Hybrid Rights
Ability to Influence
Preferred Equity +
Secured Loan
Governance
19Our Office and Portfolio Footprint
The United
Kingdom
Japan Portfolio Diversification
China Period Ending 31 December 2019
3.9%
4.0%
9.0%
China
Vietnam 2.1% Hong Kong
Hong Kong
Singapore
Malaysia
Japan
Singapore Receivable
Indonesia Cash
26.2% 54.7%
Key
Investment Exposure
The Company’s investment portfolio from a valuation perspective has not
been materially impacted by the global COVID-19 pandemic and the
Office Location Board expects this to remain the case in 2020. The markets in which the
portfolio companies operate have been affected by the pandemic to
varying degrees. However, many of these countries, including China and
Hong Kong, are showing early signs of recovery as lock-down measures
are being gradually lifted.
20Our Portfolio - Selected Investments
Domicile: Japan Domicile: Singapore
Sector: Lodging and Leisure Sector: Healthcare
Property Healthcare & Life Sciences
Carrying Value: US$2.1m
Carrying Value: US$2.2m
Quarterly and Annual
Reporting Monthly Board Seat
Governance: Governance: Quarterly and Annual
Interaction with
Reporting
Management
Secured Loan + Investment
Convertible Bond
Investment Warrants Type:
Type: (Two Tranche Portfolio
Investment) 2.2%
Attribution:
Portfolio
2.1%
Infinity Capital Group Attribution: Interest Rate: 8.0% PIK
DocDoc
A Developer of Premium Residential Projects 17.5% p.a. payable A Leader in Asian Clinical Informatics & Patient Empowerment
Interest Rate:
semi-annually in cash Conversion: Not Publicly Disclosed
2018 ADAM invested in Infinity Capital Group, the developer 1st Ranking Asset 2018 ADAM invested in DocDoc, the leading Pan-Asian virtual
Security:
of a high-end development project in Niseko, Japan – a world- Pledge network of physicians, clinics and hospitals assisting patients in Security: Not Publicly Disclosed
2024, Repayment at
class skiing destination. Target Exit: finding the highest quality of medical care at the best prices
Maturity Target Exit: IPO, Trade Sale etc.
An attractive transaction: An attractive transaction:
✓ Ability to benefit from the rising popularity of winter tourism in Niseko, Japan due to its reputation as a ✓ The company’s Artificial Intelligence (“AI”) powered doctor discovery system enables patients to find
world-class ski destination and its proximity to major Asian cities. their optimum care provider, screening by criteria such as outcome, experience and cost.
✓ Investment proceeds are secured against significant collateral with a conservative ‘Loan to Value’ ratio. ✓ Its network of 23,000 doctors, 685 clinics and 108 hospitals across 8 countries in Asia is believed to be
the largest of its kind.
✓ We believe that the high-end residential developments of Infinity Capital Group will appeal to Asia’s
prospering middle class as their propensity to spend on luxury goods and travel increases. ✓ Contracts have been signed with leading health insurance providers in China and in Singapore to
partner in offering the company’s service to policyholders.
This investment provides ADAM exposure to the rapidly growing Asian winter tourism market and This investment enables ADAM to take a significant step into the growing clinical informatics sector
further diversifies its portfolio. which is disrupting the traditional healthcare landscape.
21Our Portfolio - Selected Investments
Domicile: Hong Kong Domicile: China
Consumer & Retail Sector: Food & Beverage Energy and Resources Sector: Metals & Mining
Carrying Value: US$27.5m
Carrying Value: US$44.7m
Quarterly and Annual
Governance: Quarterly and Annual
Reporting Governance:
Investment Reporting
Convertible Bond
Type: Investment Equity and
Portfolio Type: Shareholder Loans
27.3%
Attribution: Portfolio
3.0% Cash Payable 44.39%
Fook Lam Moon (“FLM”) Future Metal Holdings Limited Attribution:
A 70 Year Veteran and Leader in Hong Kong’s Food and Beverage Interest Rate: Quarterly and 2.0%
PIK Chinese Dolomite Quarry
Sector Interest Rate: Not Publicly Disclosed
Discount Rate Not
2018 Convertible bond issued to ADAM by a Hong Kong- Conversion: 2014 ADAM is the major shareholder of Future Metal Holdings
Publicly Disclosed
based high-end food and beverage business with multiple Limited, which wholly owns a large open pit dolomite quarry (the Security: Not Publicly Disclosed
Security: Negative Pledge
Michelin stars. Target Exit: IPO, Trade Sale etc. “Quarry”) in Linfen City, Shanxi Province, China Target Exit: IPO, Trade Sale etc.
An attractive transaction: An attractive transaction:
✓ ADAM secured the Convertible Bond in FLM in exchange for certain assets of its legacy portfolio. ✓ The Quarry is positioned to capture the growth of the magnesium market in China, as dolomite is one
✓ Fook Lam Moon is engaged in the operation of high-end Chinese restaurants and F&B management. of the key ingredients in magnesium pyrometallurgy and with a wide range of applications.
✓ It is long established as the premier brand for fine Cantonese cuisine in Hong Kong with its 70-year ✓ The Quarry is strategically located with convenient access points to maximise operational efficiency.
history, renowned both locally and internationally. ✓ It has successfully renewed its Mining Licence in August 2018.
✓ This investment is directly in-line with ADAM’s strategy to generate capital gain from exposure to value ✓ An onsite team including a quarry manager were appointed by Harmony Capital to oversee operations
accretive businesses and investment instruments across Asia. at the site. In December 2019, the Quarry began production and is forecast to ramp up to full capacity
in 2020.
Delivering exposure to exciting high growth businesses in Asia while aiming to provide a secure This investment enables ADAM to participate in the long-term growth of a mineral asset producer in
income yield for ADAM. one of world’s largest emerging markets.
22Our Portfolio - Selected Investments
Domicile: Japan
Consumer & Retail Sector: Leisure and Travel
Carrying Value: US$7.3m
Quarterly and Annual
Governance:
Reporting
Investment Type: Equity
Portfolio
7.2%
Infinity TNP Attribution:
7 units in a high-end condominium hotel
2019 Share swap with Infinity Capital Group. ADAM gained a 40% interest in
Infinity TNP, the structure which holds the units in Tellus Niseko, issuing Dividend Yield: Minimum 6.0%
16,179,310 shares in ADAM at a 20% premium to the 30-day weighted average
price per share in ADAM as consideration. Target Exit: N/A
An attractive transaction:
✓ Supplements ADAM’s ability to benefit from the rising popularity of winter tourism borne through the Infinity Capital Group
transaction.
✓ The terms of the transaction guarantee a dividend yield of 6.0% and internal analysis projects that the yield will reach +7.0%.
✓ The property, Tellus Niseko, which has been independently valued by Jones Lang LaSalle at US$20.0m.
Strategic utilisation of shares swapped at a premium to market value, resulting in the consolidation of ADAM’s rapidly
increasing income yield
23Investment Pipeline
Disciplined approach to new investment opportunities in growth sector where Harmony Capital has expertise
Prospect Sector Geography Use of proceeds Investment Type Interest Rate Target IRR Target Exit Date Exit Strategy
Multi-Channel Business Expansion Secured
1 South East Asia 12-16% 30-40% 2025 IPO/Trade Sale
Network across Asia Convertible Bond
Business Expansion Secured
2 Cloud Computing South East Asia 12-16% 20-30% 2024 IPO/Trade Sale
across Asia Convertible Bond
Repayment/
Secured
3 P2P Financing India Working Capital 12-16% 20-30% 2025 IPO/Trade Sale
Convertible Bond
Business Expansion Secured IPO/Trade Sale
4 Fintech Hong Kong 14-18% 25-30% 2025
across Asia Convertible Bond
Japan Secured IPO/Trade
5 E-Commerce Domestic Expansion 15-20% 30-40% 2025
Convertible Bond Sale/Refinancing
Repayment/
Secured
6 F&B Singapore Domestic Expansion 12-16% 25-30% 2025 Trade Sale/
Convertible Bond
Refinancing
24ADAM: Competitive Advantages & Outlook
Asian Investing Expertise Investment Approach Deal Sourcing
• Offices in London, Hong Kong, • Provides growth capital with a focus on • Proprietary relationships with
Singapore with on the ground local capital gain and income generation companies and sell-side brokers
teams
• Selectively financing both emerging and • Extensive reach and ability to meet
• Expertise investing in private established businesses across various with management teams
companies, often unable to access growth sectors across Asia
traditional sources of capital
Dedicated Team with Strong Risk Management Single Solution
Experience • Detailed and through due diligence • Able to execute transactions
• Cycle-tested team with a mixture process undertaken across the capital structure
of buy-side experience
• Provides proactive management • Can provide exposure to European
• Over a decade of executing and throughout the life of an investment using and Asian markets through our
manging investments across data analytics and customised risk tools offices
jurisdictions
25Appendix
• Key Terms
• Financials
• Our Portfolio
• The Board
26Key Terms
Adamas Finance Asia Limited
Company Name:
(ADAM.LN)
Structure: Permanent Capital Vehicle
The London Stock Exchange, Alternative Investment
Market:
Market
Harmony Capital Investors Limited, with four-year
Investment Manager:
term from May 2017
Total Issued Share Capital 104,912,379
Valuation: Yearly Audited Valuation
Independent Board: Comprises of four experienced directors
1.75% of NAV Payable Semi-Annually, plus 20% of Any
Year on Year Increase in Audited NAV, subject to High
Management Fee:
Water Mark and the Hurdle. Payable in cash and
shares.
WH Ireland Limited (Nominated Advisor)
Pello Capital Limited (Corporate Broker)
Advisors: Locke Lord (UK) LLP (Legal Advisor)
Crowe UK LLP (Auditor)
Maitland/AMO (Media and Communications Advisor)
27Financials
Adamas Finance Asia Limited
Consolidated Statement of Financial Position
31 December 31 December
2019 2018
Audited Audited
US$’000 US$’000
Assets
Unquoted financial assets at fair value through profit or loss 67,172 55,519
Loans and other receivables 33,720 28,902
Cash and cash equivalents 4,071 8,828
Right of use asset 34 -
Total assets 104,997 93,249
Liabilities
Other payables and accruals 2,211 201
Current Liabilities
Loans and borrowings 1,909 -
Total liabilities 4,120 201
Net assets 100,877 93,048
Equity and reserves
Share capital 145,027 134,054
Treasury share reserve (671) -
Share based payment reserve 2,936 2,555
Accumulated losses (46,415) (43,561)
Total equity and reserves attributable to owners of the parent 100,877 93,048
No. of shares 104,912 82,465
NAV per share (US$) 0.95 1.13
28Our Portfolio
An AIM-quoted company targeting delivery of income and capital gain from a diversified mix of pan-Asian investments in the SME Sector
Infinity Capital Group (“ICG”) – A senior secured loan investment in a real estate developer of NAV US$100.9m
luxury residential properties in one of Asia’s premier ski destination – Niseko, Japan. DocDoc 2.2
ICG 2.1
Cash 4.1
DocDoc – In March 2018, ADAM invested in DocDoc, a leading pan-Asian virtual network of Infinity TNP 7.3
physicians, clinics and hospitals assisting patients in finding the highest quality of medical care at
the best prices.
Fook Lam
27.5
Infinity TNP – In November 2019, ADAM acquired a 40% holding in Infinity TNP, a wholly owned Moon
subsidiary of ICG, containing 7 units in a luxury hotel condominium being built by ICG, Tellus
Niseko.
Fook Lam Moon – A convertible bond issued to ADAM by a high-end Hong Kong-based food and
beverage business.
Future Metal 44.7
Holdings
Future Metal Holdings – ADAM is the majority shareholder of Future Metal Holdings, which
wholly owns the largest magnesium dolomite quarry in Shanxi Province, China.
Legacy Investments – ADAM’s Legacy Investments include our Limited Partnership Interest in Legacy
12.7
the Greater China Credit Fund, a loan to Jinhongbang Real Estate Development Co. Ltd, and our Investments
investment in Meize Energy Industrial Holdings.
31 December 2019
The diagram shows investments and cash only
29The Board
John Croft John Croft is an experienced director of AIM-quoted companies and has previously worked in executive and non-executive
Executive Chairman capacities with a number of fast growth companies in the technology and financial services sectors.
Hugh Trenchard Hugh Trenchard began his career at Kleinwort Benson in 1973 and has more than 40 years' experience in investment
Non-executive Director banking, including 35 years of involvement with Japan and 12 of them as a resident.
Stuart Crocker Stuart Crocker started his career in banking at Merrill Lynch after leaving the British Army in 1985. He is a Founding
Non-executive Director Member of the English Business Council in Dubai where he currently resides.
Dr. Lee George Lam Dr. Lee George Lam is the Chairman of Hong Kong Cyberport Management Company Limited and the Non-Executive
Non-executive Director Chairman of Macquarie Bank’s Infrastructure and Real Assets business in the Hong Kong and ASEAN region.
30You can also read
