Sourcing & Structuring Financing for JV and other Business Forms
Sourcing & Structuring Financing for JV and other Business Forms October 2012 IOP INDOCHINA OPPORTUNITY PARTNERS 1
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
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
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
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”
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
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
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
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
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
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
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
Thura Soe Paing Managing Director Email: email@example.com Tel: (95) 9 731 20887
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