Diamond Finance Investor Presentation July 2013

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Diamond Finance Investor Presentation July 2013

  1. 1. Investor Presentation
  2. 2. About Diamond Finance 19 33 160 2011 2012 2013F CustomersFounded in 2011, Diamond Finance LLC is a Non-Bank Financial Institution that provides loans and currency exchange services to individuals and SMEs in Mongolia.
  3. 3. Lending Activity Loan Type Monthly Rate Avg. Size (USD) SME/Micro Loan 3.4% $92,500 Consumer Loan 3.6% $7,500 Short Term Loan 4.4% $20,000 86% 8% 6% Current Loan Portfolio Apartment Collateralized Car Collateralized Other Collateral Typical Loan Collateralization: 200%
  4. 4. Products: Business Loan “typically for Micro and SME business owners and enterprises that operate in manufacturing, trade, services, agricultural sectors.” Maximum Amount MNT 250,000,000 (US$175,000) Maturity 1 - 24 months Initial Interest Rate 3.1% - 3.7% per month Loan Analysis -Analysis of business -Analysis of proposed project Repayment Monthly interest payments Flexible principle payments possible Grace Period Possible for principal payments Collateral Mortgage or other assets Disbursement Cash or bank transfer • SME Loan • Micro Loan
  5. 5. Products: Consumer Loan “for individuals and legal entities that have stable income through operations in manufacturing, trade, services and agricultural sectors.” Maximum Amount MNT 20,000,000 (US$14,000) Maturity 1 - 18 months Initial Interest Rate 1.5% - 4.0% per month Loan Analysis -Credit analysis -Income and employment verification Repayment Monthly interest payments Flexible principal payments possible Grace Period Possible for principal payments Collateral Mortgage, other assets, or up to 6 months salary Disbursement Cash or bank transfer • Standard Consumer Loan • Employee Consumer Loan
  6. 6. Products: Short Term Loan • Apartment Collateralized • Car Title Loan • Car Collateralized • Old Car Leasing • Yard Collateralized Maximum Amount MNT 50,000,000 (US$35,000) Maturity 1 – 12 months Initial Interest Rate 4.0% - 5.5% per month Loan Analysis -Analysis of available collateral -Analysis of stable income Repayment Monthly interest payments Flexible principal payments possible Grace Period Possible for principal payments Collateral Mortgage, Automobile, Yard, Other Disbursement Cash or bank transfer “high-yield loans for individuals with short term cash flow needs”
  7. 7. Current Position Key Figures 31th July 2013 (USD) Total Assets $2.7 million Gross Loan Portfolio $2.4 million Owners Equity $733,765 Return on Equity 43% Number of Borrowers 64 Average Maturity 6 months Portfolio at Risk > 30 Days 0% Ownership Structure: Asia Pacific Investment Partners LLC – 100%
  8. 8. INVESTMENT CASE MACROECONOMIC FUNDAMENTALS
  9. 9. Observed and Forecasted Change in GDP -5 0 5 10 15 20 2008 2009 2010 2011 2012f 2013f Mongolia World BRIC Source: World Bank, NSOM, OECD
  10. 10. Inflation 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 0.0% 4.0% 8.0% 12.0% 16.0% 20.0% Jul-11 Jan-12 Jul-12 Jan-13 Mar-13 DiamondMonthlyRate InflationRate While government policy has pushed inflation down, Diamond’s monthly rates have remained relatively constant Inflation Diamond Monthly Rate
  11. 11. Mongolian Banking Industry 0 2 4 6 8 10 BillionsUSD Banking Industry Assets Bank Assets 0 50 100 150 200 250 MillionsUSD NBFI Assets NBFI Assets
  12. 12. INVESTMENT CASE BUSINESS PLAN
  13. 13. Comparative Performance 27% 36% 46% Average Loan Interest Rate Diamond Finance NBFIs Banks 3% 6% 0% Average Default Rate
  14. 14. Superior Cost Structure and Higher Returns 49% 38% 37% 28% 4.1% 8.5% Diamond Finance Global Average Credit Mongol Portfolio Yield and Net Profit Yield on Gross Portfolio Net Income Diamond Finance Global Average Credit Mongol Tax Expense 3% 0.50% 0.90% Operating Expense 5% 24% 16.70% 0% 5% 10% 15% 20% 25% 30% Costs Operating Expense Tax Expense
  15. 15. Growth Forecast $0.03 $0.19 $1.00 $3.60 $4.48 $0.66 $1.45 $5.00 $8.00 $12.00 $0 $2 $4 $6 $8 $10 $12 $14 2011 2012 2013F 2014F 2015F MillionsUSD Net Profit Gross Loan Portfolio
  16. 16. Investment Considerations 1. Superior Returns and High- Quality Assets 2. Favorable Macroeconomic Conditions 3. 35+ Years Management Experience 4. Active Oversight by Senior Credit Committee 5. Advanced Lending Technology 6. Powerful Management Information System (MIS)
  17. 17. Investment Opportunity Borrower Diamond Finance Limited, a company incorporated in Hong Kong and a wholly owned subsidiary of Asia Pacific Investment Partners Limited (APIP) Lenders Individual lenders with a minimum loan size of US$50,000, increasing in multiples of US$10,000 Facility Up to US$3 million to be split into three (3) tranches of US$1 million Term Two (2) years from the end of each tranche close Repayment In full at the term of the Facility Margin 1,300 bps per annum Interest Period 6 months in arrears Security Package Guaranteed by Asia Pacific Investment Partners HK Governing Law and Jurisdiction Laws of Hong Kong and subject to the exclusive jurisdiction of Hong Kong courts Timetable to Close of Second Tranche 4 to 6 weeks
  18. 18. The Guarantor Asia Pacific Investment Partners (“APIP”) is a Mongolia focused operating group that has a range of subsidiaries primarily focused around property development, cement production and financial services. APIP has a strong asset base, which includes one of the largest and most highly valued landbanks in the country and the only cement producing facility in the capital. This enables APIP to be exceptionally well positioned to take advantage of what many multilateral institutions expect will be the fastest growing economy in the world over the next five years. The cement factory’s future long term growth is underpinned by a strategically placed limestone deposit and the landbank provides key sites for APIP’s ten year property development pipeline. To date, APIP has successfully designed, constructed, marketed, managed and fully sold five major residential and mixed-use developments in Ulaanbaatar. It is currently building its next two developments. The larger of the two is the the Olympic Residence, which is a mixed-use development with 97 luxury residential units and four floors of retail and leisure facilities. The second is the Village at Nukht; a 10,000 sqm plaza consisting of retail, F&B, office and entertainment venues. APIP has also successfully obtained a securities and underwriting license and a non-banking financial institution license. Asia Pacific Securities is now one of the most active brokerage firms on the country’s burgeoning stock market and Asia Finance is successfully lending to SMEs at up to 4.0% per month. APIP is forecast to return approximately USD65 million in net income for 2014.
  19. 19. Will@apipcorp.com FOR MORE INFORMATION

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