Sourcing & Structuring Financing for JV and other Business Forms
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Sourcing & Structuring Financing for JV and other Business Forms

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All Myanmar Investment Partners (AMIP) ...

All Myanmar Investment Partners (AMIP)
Indochina Opportunity Partners (IOP)
October 2012

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  • 1. Sourcing & Structuring Financing for JV and other Business Forms October  2012   IOP INDOCHINA OPPORTUNITY PARTNERS 1  
  • 2. AMIP  OVERVIEW  All  Myanmar  Investment  Partners  (AMIP)  is  a  specialised  investment  and  business  advisory  firm  exclusively  dedicated  to  developing  business  opportuni@es  in  Myanmar    PRIVATE  EQUITY:  AMIP  –  together  with  Dragon  Capital  &  FIDP  –  is  part  of  Indochina  Opportunity  Partners  (IOP)    IOP  has  established  the  Indochina  Opportuni5es  Fund  (IOF)    BUSINESS  ADVISORY:  Inbound  investors:    Structuring  and  overall  strategic  advisory    Local  Corporates:    Corporate  Finance  advisory  
  • 3. INDOCHINA  OPPORTUNITY  PARTNERS    •  Indochina  Opportuni@es  Fund  is  a  $250m   IOP OFFICE NETWORK fund  –  minimum  20%  (or  $50m)  is  allocated   to  Myanmar  through  AMIP   INDIA CHINA•  IOP  leverages  the  combined  infrastructure   of  Dragon  Capital  and  FIDP  in  the  Indochina   region,  giving  it  insider  status   VIETNAM MYANMAR•  Office  network  spread  over  six  regional   LAOS HANOI major  ci@es  (and  one  loca@on  pending),   VIENTIANE with  professional  staff   YANGON•  Dragon  Capital  provides  major  back-­‐office   THAILAND support  in  terms  of  legal,  research,   BANGKOK accoun@ng,  admin  from  its  Ho  Chi  Minh  city   CAMBODIA headquarters   PHNOM PENH HO CHI MINH•  It  also  provides  strong  sponsor  backing  via   CITY IOP Office a  $10m  commitment  as  co-­‐anchor  investor   Pending IOP Office of  the  Fund,  alongside  Interna@onal   Non-Indochina SINGAPORE Financial  Corpora@on  (IFC)  –  part  of  the   World  Bank  Group  
  • 4. PRIVATE  EQUITY  POTENTIAL  FOR  MYANMAR   • Cash  based  economy   • Very  li]le  bank/ins@tu@onal  • Poli@cal  reform   financing  op@ons  • Economic  reform   • Most  growth  is  organic  • Liberalisa@on  polices   Vast   central  bank   Scarcity  of   PotenFal   independence,   Capital   financial  services   Other  Drivers     Reform   • Starved  of  growth  capital     • Produc@vity  gains  through   • 2013 SEA Games & technology  and  knowledge   World Economic Forum transfer  with  minimum  CapEx   • 2014 ASEAN Presidency • Favourable  demographics  and   • 2015 ASEAN FTA geography  
  • 5. BUT…   CHALLENGESLEGAL  &  REGULATORY:   •  Where’s  the  Law?   •  The  Exit?    But  first  how  about  the  Entrance?  INFRASTRUCTURE:   •  Power   •  TransportaFon   •  CommunicaFon   •  Market  Data  LOCAL  COMPANIES:   •  ValuaFon   •  Due  Diligence   •  Big  Emphasis  on  “Trust”  and  “Seeing  Eye-­‐to-­‐Eye”  
  • 6. STRUCTURING  THE  VEHICLE   Myanmar Investment Commission Myanmar Companies Act Holding Holding Company Company Offshore Investment SPV 100% owned Myanmar Company 100% JV Company Myanmar JV Company owned Incorporate
  • 7. THE  MIC  &  JV  ROUTE   Foreign  Investor   Local   Company   Investment  $$$   Opera@onal   Licenses   Technology   Regulatory   Knowledge   Knowledge   Exis@ng  Overheads   and  Support   Interna@onal   Markets   Local  Market   Knowledge  
  • 8. FINANCING  CONSIDERATION   Financing  Considera@ons  i.      Friends,  Family  and  Contacts  §  Ini@ally,  most  likely  source  of  funding  for  fron@er  economies    §  Characteris@cs:   Undefined   §  High  in  volume   Risks   §  Accoun@ng  for  smaller  deals   Beng  on   Loose  or  No   §  Most  <  US$  5  mil     You   RegulaFons     Trust  §  Advantages:   §  Quick  to  understand  concept  /  get  deal  done     No  Track   Evolving   business   §  Limited  legal  /  structuring  considera@ons   Record   plan     Unchartered  §  Limita@ons:   Territory   §  Can  be  hands  on  /  unsophis@cated  investors   §  Tenure  could  be  shorter   §  Limited  follow  on  capital  
  • 9. FINANCING  CONSIDERATION   Financing  Considera@ons  ii.      Family  Offices  §  The  next  likely  source  of  Funding    §  Characteris@cs:   Undefined   §  Largely  decided  by  one  investment  professional   Risks   §  Accoun@ng  for  small  /  mid-­‐size  deals   Beng  on   Loose   §  Most  <  US$  10  mil     Wild  Card   RegulaFons     OpportunisFc  §  Advantages:   §  Rela@vely  quick  to  understand  concept/   Evolving   No  Track    get  deal  done     Record   business   plan   §  Flexible  on  legal  /  structuring  considera@ons   Unchartered     Territory  §  Limita@ons:   §  Limited  follow  on  capital   §  Likely  milestones  need  to  be  met   §  Tying-­‐in  with  core  business  that  funds  family  office  
  • 10. FINANCING  CONSIDERATION   Financing  Considera@ons  iii.  Corporates  •  Difficult  source  of  funding    •  Characteris@cs:   Undefined   Risks   •  Likely  focused  on  specific  business  opportunity   •  Accoun@ng  for  variety  of  sizes   Beeng  on   Regulated   •  Most  >  US$  5  mil  +   LT  Growth  •  Advantages:   Strategic   •  Brings  knowledge  /  technology  transfers   Some/ •  Experienced  operators   Evolving   Limited   business   •  Ability  for  follow  on  investments   Track   plan   Record   Unchartered  •  Limita@ons:   Territory   •  Slow  to  make  decisions   •  Limited  ability  to  react  quickly  to  market  
  • 11. FINANCING  CONSIDERATION   Financing  Considera@ons  iv.  Developmental  InsFtuFons  •  Good  opportunity  for  fron@er  markets  •  Characteris@cs:   Undefined   •  Accoun@ng  for  variety  of  sizes   Risks   •  Most  <  US$  2mil  and    >  US$  50  mil  +   Beeng  on   Regulated   Enhancement  •  Advantages:   Development   •  Mandated  to  develop  fron@er  markets   Driven   •  Understanding  of  country  situa@on   Defined   Limited   •  Ability  for  follow  on  investments   Record   Business   Plan   •  Poli@cal  coverage   Based   Previous   Investments  •  Limita@ons:   •  Slow  to  make  decisions   •  Can  be  poli@cally  sensi@ve   •  Tendency  to  replicate  previous  models    
  • 12. FINANCING  CONSIDERATION   Financing  Considera@ons  v.    TradiFonal  Financial  Players  •  Unlikely  source  of  investment  ini@ally  •  Characteris@cs:   Undefined   •  Likely  focused  on  large  projects   Risks   •  Prefer  liquid  investments   Beeng  on   Low  Risk  /   Regulated   •  Most  >  US$  20  mil  +   High  Return     Alterna@ve  •  Advantages:   Investment   •  Quick  to  invest   No  Track   Developed   Business   •  Sophis@cated  investors   Record   Plan     Unchartered  •  Limita@ons:   Territory   •  Lack  of  local  market  knowledge   •  Complex  structures   •  Sensi@ve  to  longer  tenures   •  Conserva@ve  investors  
  • 13. Thura  Soe  Paing  Managing  Director    Email:    thura@allmyanmarinvestment.com  Tel:    (95)  9  731  20887