REG - Symphony Int Hdgs - Shareholder Update

Symphony International HoldingsAnnouncement

26/11/2021 07:00

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RNS Number : 6382T  Symphony International Holdings Ltd  26 November 2021

Symphony International Holdings Limited ("Symphony or the "Company")

 

26 November 2021

 

Dear Shareholders,

 

·    Symphony International Holdings Limited's ("Symphony" or the
"Company") unaudited Net Asset Value ("NAV") at 30 September 2021 was
US$400,446,457 and NAV per share was US$0.7800. This compares to NAV and NAV
per share at 30 June 2021 of US$423,756,655 and US$0.8254, respectively. The
change in NAV is due to a dividend payment by Symphony in 3Q21 and a decline
in the value of unlisted  investments (before new investments), which was
partly driven by a depreciation in the Thai Baht and other movements in value

·    Symphony's share price continued to trade at a discount to NAV, which
narrowed during the quarter. At 30 September 2021, Symphony's share price
was US$0.43, representing a discount to NAV per share of 44.6%. This compares
to a share price discount to NAV of 58.8% at 30 June 2021.

 

Over the past several months there have been a number of positive developments
in several companies in our portfolio and we thought it would be useful to
highlight them to you below before the regular quarterly shareholder update
for the third quarter of 2021.

 

·    Minor International Public Company Limited ("MINT") saw a sharp
recovery in core revenue and EBITDA by 33% and 190%, respectively, in 3Q21 yoy
due to the performance of hotel operations in Europe and the Maldives. The
more positive outlook for the hospitality industry and improving performance
of MINT has supported a stronger share price, resulting in an appreciation of
 almost 25% since 31 December 2020

·    Minuet Limited ("Minuet") entered into agreements to sell two parcels
of land that total 21 rai (3.4 hectares). The aggregate gross sale price is at
a significant premium of 2.3x to the current carrying value of the land on
Symphony's books

·    Soothe Healthcare Private Limited ("Soothe") sales for the 3-month
period ending 30 September 2021 were 83% higher than the same period a year
earlier. The growth has been driven by strong sales of diapers and new product
launches

·    The Liaigre Group ("Liaigre") continued to see positive growth with a
31% increase in sales for the 9-month period ended 30 September 2021 compared
to the same period a year earlier. The change has been driven by strong sales
across geographies and divisions

·    In 3Q21 CHANINTR reported a 30% increase in order book, a leading
indicator of growth in its business

·    The ITL group continued perform strongly in 3Q21. Revenue and gross
profit increased by 90% and 72%, respectively, compared to the same period a
year earlier due to the strong performance in most business units and
associates

·    Smarten Spaces Pte. Ltd ("Smarten") saw Q3 annualised run-rate
revenue increase by 53% yoy as the business grew its customer base. Smarten's
solutions have been deployed in over 100 cities across 20 countries to date
and the business is attracting a lot of customer interest and currently has a
very full pipeline of additional opportunities

·    August Jewellery Pvt. Ltd. ("Melorra") revenue grew qoq 52.7% and yoy
by 598.5%, driven by additional marketing initiatives and new experience
centers that have opened across India. In October, Melorra completed a new
funding round on terms better than Symphony's initial investment. Symphony
also took a small participation in the new round.

·    Good Capital Fund I exited its investment in SimSim, a social
commerce start-up via a sale to Google. The return on the investment estimated
to be 3.9x with the proceeds from sale being greater than the capital that the
Fund has called from LPs till date

·    House of Kieraya ("HOK") reported a revenue increase of 26.3% qoq and
the launch of a new brand Prava, which has been received well by the market

 

MARKET OVERVIEW AND OUTLOOK

While the third quarter of 2021 saw a global uptick in infection and
hospitalisation rates due to the Covid-19 Delta variant, countries with high
vaccination rates demonstrated continued economic growth despite the ongoing
health crisis. However, there have been drags on the global economic recovery,
especially in Asia Pacific, where "zero tolerance" policies and low
vaccination rates have led to continued restrictions and lockdown measures.
The Bank of Singapore downgraded GDP forecasts for Indonesia, Malaysia,
Philippines and Thailand to 2.9% overall, compared to 6% growth for the global
economy. There remains risks to these forecasts as the Federal Reserve began
reducing its pace of quantitative easing this year rather than waiting until
2022 and there has been weaker than expected economic data from China across
exports, credit growth, fixed asset investment, retail sales and industrial
production.

In Vietnam, economic growth is expected to slow to 3.8% from 6.7% due to a
nationwide lockdown to curb the resurgence of the coronavirus pandemic
according to Asian Development Bank (ADB) estimates. These initiatives have
led to a tightening of the labour market, lower industrial output, and
disruption to supply chains however, the Vietnamese economy is expected to
bounce back in 2022.

India's macroeconomic data points toward a rapid recovery. Inflation, credit
growth and exports (services and goods) have all grown in 3Q21. In terms of
the labour market, India's employment rate increased by 0.72 percentage points
translating to an increase of 8.5 million new jobs during September alone. Of
this, 6.5 million and 2 million jobs were created in rural India and urban
areas, respectively.

In Thailand, a spike in Covid-19 cases and delayed reopening to foreign
visitors continues to hurt the economy, especially the tourism sector. A
senior World Bank economist for Thailand, has said that Thailand's economy is
forecast to grow 1% this year, down from the 2.2% projected in July. After
recording 40 million foreign tourists in 2019, Thailand is now expected to
reach 160,000 this year, down from the 600,000 arrivals projected in July.
Tourist arrivals are seen at 1.7 million next year, when the economy is
forecast to grow 3.6% according to the World Bank. Significant progress on
vaccination and earlier-than-expected relaxation of containment measures will
likely help restore private sector confidence and boost private consumption
for the rest of 2021.

In the third quarter of 2021, Symphony announced three new investments that
include Meesho, India's largest social-ecommerce company, House of Kieraya, a
multi-brand online furniture rental business and Blowhorn, an India based
same-day intra-city last mile logistics provider. We continue to see positive
momentum from the majority of our portfolio that we expect to continue into
2022.

COMPANY UPDATE

Symphony's listed investments accounted for 19.3% of NAV at 30 September 2021
(or US$0.1505 per share), which compares to 20.4% of NAV (or US$0.1685 per
share) at 30 June 2021. The percentage change is predominantly due to the sale
of 9.3 million MINT shares during the quarter.

The value of Symphony's unlisted investments (including property) comprised a
further 84.4% of Symphony's NAV (or US$0.6587 per share), which compares to
78.4% (or US$0.6470 per share) at 30 June 2021. The percentage change is
predominantly due to new investments made during the quarter that were
partially offset by a depreciation in the Thai baht and other movements in the
value of unlisted investments.

Temporary investments accounted for (3.7%) of NAV (or negative US$0.0291 per
share), which compares to 1.2% of NAV (or US$0.0100) per share. The percentage
change is due to dividends paid by Symphony, new investments and expenses that
were partially offset by proceeds from the MINT share sales.

Symphony's share price continued to trade at a discount to NAV. At 30
September 2021, Symphony's share price was US$0.43, representing a discount
to NAV per share of 44.6%. This compares to a share price discount to NAV of
58.8% at 30 June 2021.

PORTFOLIO DEVELOPMENTS

HOSPITALITY

 

Minor International Public Company Limited ("MINT"): is one of the largest
hospitality and restaurant companies in the Asia Pacific region. MINT is a
hotel owner, operator and investor with a portfolio of over 526 hotels under
the Anantara, Avani, Oaks, Tivoli, NH Collection, NH Hotels, nhow, Elewana,
Marriott, Four Seasons, St. Regis, Radission Blu and Minor International
brands in 55 countries across Asia Pacific, the Middle East, Africa, the
Indian Ocean, Europe, South and North America. MINT is also one of Asia's
largest restaurant companies with over 2,373 outlets system-wide in 23
countries under The Pizza Company, Benihana, Swensen's, Sizzler, Dairy Queen,
Burger King, Riverside, Thai Express, The Coffee Club and Bonchon. MINT is one
of Thailand's largest distributors of lifestyle brands and contract
manufacturers. Its brands include Anello, BergHOFF, Bodum, Bossini, Charles
& Keith, Esprit, Joseph, Radley, Scomadi, Zwilling J.A. Henckels and Minor
Smart Kids.

 

Symphony has invested a total of US83 million in MINT and we have received
proceeds of approximately US$304 million through dividends and realizations of
capital gains. As such our net investment cost of this investment  stands at
negative US$221 million. MINT has been one of our best investments.

 

Update: MINT reported that core revenue and EBITDA increased by 33% and 190%
in 3Q21, respectively, compared to the same period a year earlier. The
improvement is due to a recovery in the hotel business, driven by properties
in Europe and the Maldives. The operating environment remained challenging in
Thailand and other parts of Asia with ongoing Covid-19 restrictions in place.
As a result, the total systems sales from the restaurant business declined by
7.5% in 3Q21 compared to same period a year earlier. Retail and contract
manufacturing operations were also impacted. The reduced Covid-19 related
restrictions in Thailand beginning in September and the gradual opening-up of
other geographies in Asia to tourism is expected to positively impact hotel
and restaurant operations in the coming quarters. MINT's average monthly free
cashflow turned positive during 2Q21 and continued to strengthen in 3Q21 with
an ongoing recovery in operations and asset rotation initiatives. MINT's hotel
brands won 38 accolades from Condè Nast Traveller Readers' Choice Awards.

 

During the quarter, the value of Symphony's investment in MINT decreased from
US$86.5 million at 30 June 2021 to US$ 77.3 million at 30 September 2021. The
change in value is due to the sale of 9.3 million shares (generating US$9.4
million in net proceeds), a 5.5% depreciation in the Thai Baht and an
appreciation in MINT's share price by 5.0%. The more positive outlook for the
hospitality industry and improving performance of MINT has supported a
stronger share price, resulting in an appreciation of almost 25% since 31
December 2020.

 

LIFESTYLE/ REAL ESTATE

 

Minuet Limited ("Minuet"): is a joint venture between Symphony and an
established Thai partner. Symphony has a direct 49% interest in the venture,
which owns a large piece of land  located in close proximity to central
Bangkok, Thailand. As at 30 September 2021, Minuet held approximately 211 rai
(34 hectares) of land. Over the years land prices in this area have
appreciated steadily and we have managed to sell several parcels of land at
progressively higher prices to local developers who have built successful
developments and have come back for more land. Judging from the rate of
urbanization in the area, we are confident that this asset will continue to
appreciate as in the past.

Update: Recently, Minuet entered into agreements to sell two parcels of land
that total 21 rai (3.4 hectares) that will generate gross proceeds for Minuet
of approximately US$22.9 million on completion, which will be in  2022. The
aggregate gross sale price is at a significant premium of 2.3x to the current
carrying value of the land on Symphony's books. The value of Symphony's
interest at 30 September 2021 was US$65.4 million based on an independent
third party valuation at 30 June 2021 and adjusting for the recent land sale.
This compares with US$64.5 million at 30 June 2021. The change in value is
primarily due to an increase in value related to the land being sold, which
was partially offset by a 5.2% depreciation of the offshore Thai baht during
the same period.

 

Symphony's original investment in Minuet was $78.3 million. We have since
received a total of approximately US$59.0 million in distributions related to
partial sales of land by Minuet and we believe, that barring unforeseen
developments, the remaining land will enable us to realise proceeds in excess
of the current valuation of $65.4 million.

SG Land Co. Ltd ("SG Land"): is a joint venture company that owns the
leasehold rights for two office buildings in downtown Bangkok - SG Tower and
Millenia Tower. The two buildings in SG Land's portfolio have high occupancy
rates and offer attractive rental yields. Symphony holds 49.9% of the venture.
Symphony originally invested a total of US$8.5 million for its interest in SG
Land and at 30 September 2021 had received aggregate distributions of
approximately US$20.2 million.

Update: The value of SG Land as at 30 September 2021 was US$6.5 million based
on an independent third-party valuation at 30 June 2021. The valuation is
approximately the same as at 30 June 2021 due to an increase in cash (which
benefit has not yet been cancelled out by a reduced lease term used to derive
fair value), which has been offset by a 5.2% depreciation in the Thai baht. We
expect to continue to receive attractive returns for the remaining duration of
approximately 2 and 4 years for each of the tower leases, respectively. By the
end of the lease terms, Symphony will have achieved a realised annualised
return for this investment in the low teens over a period of approximately 14
years.

 

Niseko Property Joint Venture ("Niseko JV"): Symphony invested in a property
development venture that acquired land in Niseko, Hokkaido, Japan. Symphony
has a 37.5% interest in this venture, which it acquired for a total investment
of US$10.2 million and has to date received distributions of US$16.7 million
from the partial sale of land held by the venture. The Niseko JV sold 31% of
the development site to Hanwha Hotels & Resorts with a further 39% to a
new joint venture company that is equally held and being co-developed by the
Niseko JV and Hanwha Hotels & Resorts. The Niseko JV continues to
effectively hold approximately 50% of the development site, of which one third
of the total site is held for future development and/or sale.

 

Update: There is no new update related to the joint development in Niseko
with Hanwha Hotels & Resorts. The project is in the design and approval
phase and is being positioned as premium ski-in/ski-out landmark property in
Hirafu Village. Hanwha has commenced pre-sales on one of the lots that they
acquired from Symphony and have achieved sale prices that are amongst the
highest in Niseko. The Niseko JV continues to also explore options for the
third portion of the original development site and a smaller separate parcel
of land in the upper Hirafu area that it continues to wholly own.

 

Desaru Property Joint Venture in Malaysia: Symphony has a 49% interest in a
property joint venture in Malaysia with an entity owned by Khazanah, the
Sovereign Wealth fund of the Government of Malaysia. The joint venture has
developed a beachfront resort and will offer private villas for sale on the
south-eastern coast of Malaysia, branded and managed by One&Only Resorts
("O&O").

Update: Despite international travel not yet opening up in Malaysia, due to
the Covid-19 pandemic, the One&Only Desaru Coast saw a pickup in
occupancies from the domestic travel market. During the first month of
operation, the resort exceeded occupancy targets by 38.5%. The resort
continues to win accolades and most recently won the World Travel Awards for
'Asia's Leading New Resort'. Going forward the company will be focusing on the
launch of the private villas. The fair value of Symphony's interest at 30
September 2021 was US$29.4 million based on an independent third-party
valuation at 30 June 2021. The change in value from US$31.0 million at 30 June
2021 is due to an increase in liabilities related to the financing structure
for the development and a 1% depreciation in Malaysian ringgit.

 

Phuket Luxury Villa: Symphony holds a one third interest in a luxury villa in
Phuket, Thailand. Together with an effective cash payment, the Phuket Villa
formed part of the settlement in June 2020 for a structured loan transaction
made by Symphony in 2014. The value of the Phuket Villa at 30 September 2021
is based on an agreed value related to the sale of the Villa. Barring any
unforeseen circumstances, the sale of the Villa is expected to complete in
2021 and Symphony will have realised a return, from the structured
transaction, of approximately 15% per annum over a period of some seven years.

 

HEALTHCARE

 

ASG Hospitals Pvt Ltd ("ASG"): ASG Hospitals Pvt Ltd ("ASG") is a
full-service eye- healthcare provider with operations in India, Africa, and
Nepal. ASG was co-founded in Rajasthan, India in 2005 by Dr. Arun Singhvi and
Dr. Shashank Gang. ASG's operations have since grown to 38 clinics, which
offer a full range of eye-healthcare services, including outpatient
consultation and a full suite of inpatient procedures (cataract, retina
surgeries, Lasik, glaucoma, cornea and other complicated eye surgeries). ASG
also operates an optical and pharmacy business, which is located within
clinics. Symphony invested in ASG in tranches and following the completion of
the final tranche in July 2020, Symphony has a 19.24% interest in ASG.

 

Update: Following the second wave of Covid infections in April 2021,
government related restrictions continued to ease through 3Q21, which has had
a positive impact on ASG's operations. Net revenue in 3Q21 was 133% higher
than the same period a year earlier. EBITDA remained positive, which compares
to negative EBITDA during the same quarter in 2020 that followed the first
Covid-19 wave. The growth in revenue has been driven by higher inpatient and
outpatient numbers and an increase in average revenue per patient. ASG opened
four new hospitals in 3Q21 located in Amritsar, Darbhanga, Panjim and Gwalior,
which brings the total number of hospitals to 38. The ASG group has a strong
organic and inorganic expansion pipeline.

 

Soothe Healthcare Private Limited ("Soothe"): was founded in 2012 and
operates within the fast-growing feminine hygiene and disposable diaper market
segment in India. Together with government initiatives to promote usage,
growing disposable income in India is expected to drive the market size for
feminine hygiene products over the coming decades. Symphony completed its
investment in Soothe in August 2019 and holds a significant minority
position.

 

Update: Total monthly sales were impacted by the Covid-wave in India in
April, which had resulted in intermittent closures of distributers and points
of sale.  As a result, sales slowed in April and May, but began to pick-up in
June. The operating environment continued to improve and Soothe reported
record monthly revenue September 2021. Soothe sales for the 3-month period
ending 30 September 2021 were 83% higher than the same period a year earlier.
The growth has been driven by strong sales of diapers and sales from new
products launched in 3Q21 that include Paree hair removal cream, Paree Wipes,
Super Cute's Wipes & Super Lyf Adult Diapers. Aside from leveraging its
brand names and distribution platform, Soothe launched a new celebrity
marketing initiative for the Paree brand in September that is expected to have
a positive impact on sales in the coming quarters. As mentioned in the last
update, a material secondary transaction with a third party in the shares of
Soothe were completed in 3Q21 at a significant premium to the valuation at
which Symphony invested.

LIFESTYLE

Liaigre Group ("Liaigre"): In May 2016 Symphony acquired, as part of a
consortium, Financier CL SAS, the holding company of the Liaigre Group
("Liaigre"). The Liaigre brand is synonymous with discreet luxury and has
become one of the most sought-after luxury furniture brands. Liaigre has a
strong intellectual property portfolio and offers a range of bespoke
furniture, lighting, fabric & leather, and accessories through a network
of 26 showrooms across Europe, the US and Asia. In addition, Liaigre also
undertakes exclusive interior architecture projects for select yachts, hotels,
restaurants and private residences.

Update:  The Liaigre Group ("Liaigre") continued to see positive growth with
a 31% increase in sales for the 9-month period ended 30 September 2021
compared to the same period a year earlier. Although Asian showrooms have seen
the largest percentage improvement in sales, predominantly driven by China,
there has also been a strong sales growth from showrooms in France and the
US. The new showroom in Beijing is already ahead of budget and management
have indicated a strong pipeline of potential sales in China, which will
continue to drive overall sales in Asia. There continues to be delays at
factories for a variety of reasons, which is causing some underperformance in
sales. A number of new manufacturers have been sourced and will begin
producing furniture for Liaigre, which will gradually ease bottlenecks. The
interior architecture and design division is almost at capacity as the
pipeline of projects continue to grow. Management is expanding Liaigre's
capability in this area across geographies.

Our investment in Liaigre was off to a slow start because of poor trading
conditions shortly after the investment was completed; conditions deteriorated
further because of the restrictions imposed by the pandemic in 2020 &
2021. Trading conditions seem to be improving and we also have some new
initiatives under way which we expect will enhance the value of this
investment. We hope to be able to provide more information on these in the
near future.

CHANINTR ("Chanintr"): is a luxury lifestyle company, based in Thailand, which
primarily sells several high-end U.S. and European furniture and household
accessory brands. The current portfolio of furniture brands includes Christian
Liaigre, Barbara Barry, Baker, Herman Miller & Minotti. In addition
Chanintr also sells Bulthaup kitchens, Puiforcat flatware, and St. Louis
crystal. It also provides Furniture, Fixtures & Equipment solutions for
various real estate and hotel projects. Chanintr also has the franchise to
operate the Clinton Street Baking Company ("CSB") F&B outlets in selected
Asian markets. In 2019, Chanintr launched a new program called Chanintr
Residences which will showcase custom-designed luxury residences as turnkey
projects.

Update:  In Q3 2021 CHANINTR saw a 30% yoy increase in order book and a 4%
yoy increase in sales recorded. Order book is a leading indicator of strong
growth in the business while the restrained growth in sales recorded is due to
delays in the supply chain and Covid-19 led delivery issues the company is
facing. However, EBITDA margins fell 6% yoy due to lower sales recorded this
quarter and an increase in operational expenses in the business. The company
saw strong demand for the Pergo furniture rental business and is also
exploring a "buy-to-rent" financing model where customers can purchase a chair
and rent it to the company to earn a return. The company has signed up with
Bitazza to accept cryptocurrencies as a form of payment; customers will be
able to purchase furniture with Bitcoin, Ethereum and USDT which will
immediately be converted to Thai Baht to mitigate exchange rate risk. In line
with the company's green initiatives, on 1(st) September CHANINTR launched a
"1 Tree for 1 Purchase" campaign and is the first company in Thailand to
partner with "Plant for the Planet", an international non-profit organisation.
The company has also registered for the UN Global Compact, a voluntary
initiative based on CEO commitments to implement universal sustainability
principles and to take steps to support the goals of the United Nations.

 

Wine Connection Group ("WCG"): At the end of April 2014, Symphony invested in
the Wine Connection Group ("WCG"), Southeast Asia's leading wine themed Food
and Beverage chain with approximately 71 outlets in Singapore, Thailand,
Malaysia and South Korea.

 

Update: The Food & Beverage industry was hit very hard by government
mandated measures related to the pandemic. WCG's performance was mixed across
its main markets in Singapore and Thailand. Lockdowns and restrictions caused
by the resurgence of COVID-19 led to a 13.5% qoq decline in total revenues.
However, retail revenues remained strong led by a 20.8% sales increase in
Singapore and a 5.4% increase in Thailand.

 

EDUCATION

 

WCIB International Co. Ltd. ("WCIB"): In January 2017, Symphony entered into
a joint venture, WCIB International Co. Ltd. ("WCIB"), that developed and
operates Wellington College International Bangkok, the fifth international
addition to the Wellington College family of schools from the UK. Symphony's
investment was made by way of a combination of an injection of a portion of
the land owned by Minuet, in exchange for equity, and some cash. WCIB operates
a co-educational school that will ultimately cater to over 1,500 students aged
2-18 years of age when all phases are fully complete. WCIB commenced
operations for the Primary school in August 2018 with inaugural students
attending Nursery to Year 6.

 

Update: The government mandated lockdowns continued to affect WCIB's
operations in 3Q2021, with reduced enrolment and rebates to compensate for
remote learning. As a result, management continue seek operational savings
until the situation fully normalizes. The campus reopened on 25 October as
part of the first tranche of 63 schools to reopen in the Bangkok Metropolitan
Area. The permission to reopen was approved based on robust Covid protocols.
The management team are cautiously optimistic that the outlook will continue
to improve. The Senior school building is almost complete and had a soft
opening on November 15, 2021. It is now being used by students from Class 7
& above.

 

Creative Technology Solutions DMCC ("CTS"): is a UAE-based company that
provides technology solutions to K12 schools in the UAE and the Kingdom of
Saudi Arabia ("KSA"). The company was founded in 2013 to provide customized IT
solutions to the education sector, including hardware, software and training.
Symphony made its investment in CTS in June 2019.

Update:  CTS sales and EBITDA in 3Q21 grew by 123% and 131%, respectively,
compared to the same period a year earlier. The growth has been driven by
additional mandates from the Abu Dhabi Education Counsel ("ADEK"), which
includes a role as the primary IT project manager for schools under ADEK's
purview. The K12 business has stabilised and management is focused growing
this business with less reliance on large clients. This will allow CTS to
gradually increase services provided to a larger group of schools, which will
prevent volatility in revenues from this division. CTS is exploring additional
relationships to expand its higher education business.

LOGISTICS

Indo Trans Logistics Corporation ("ITL"): was founded in 2000 as a
freight-forwarding company and has since grown to become Vietnam's largest
independent integrated logistics company with a network that is spread
across Vietnam, Cambodia, Laos, Myanmar, and Thailand. ITL has grown to
national champion status in Vietnam with over 2,000 employees across its
business units and joint ventures. ITL's strategic plans include supporting
small and medium enterprises in Vietnam and across the Indochina region.
Symphony bought out the shares that had originally been held by Singpost, the
Singapore Post office, at a cost of $42.6 million for a roughly 28.6%
interest. A subsequent issue of shares pursuant to a convertible security held
by another shareholder diluted Symphony's interest to the current level of
25.1%.

Shortly after completing the investment, Symphony assisted ITL in arranging a
financing package from the International Finance Corporation ("IFC"), which
enabled ITL to acquire an additional 55% of a port operator, South Logistics
Joint Stock Company ("SOTRANS"), in which it already held an approximate 42%
interest. The acquisition of SOTRANS has enhanced the valuation of ITL through
the consolidation of its results and, in the longer term, the development
& realization of its significant real estate holdings.

Update:  The ITL group continued to see strong performance during the
pandemic. Revenue and gross profit increased by 90% and 72%, respectively,
compared to the same period a year earlier. The change is due to the full
consolidation and the better than expected performance of South Logistics
Joint Stock Company ("SOTRANS"), its aviation GSA business, freight management
and ITL's associates. The value of Symphony's investment in ITL at 30
September 2021 was US$83.7 million, which compares to US$88.4 million at 30
June 2021. The change in value is predominantly due to a decrease in the
comparable market multiples used to value the business, which was partially
offset by an increase in EBITDA for the trailing 12-months.

 

NEW ECONOMY

 

Smarten Spaces Pte. Ltd. ("Smarten"):  In November 2019, Symphony invested in
Smarten Spaces Pte. Ltd ("Smarten"), a Singapore based SaaS
(Software-as-a-Service) company that provides software solutions for space
management in commercial and industrial properties. Smarten was founded in
2017 by Dinesh Malkani and offers an end-to-end solution for workplace safety
and flexibility on a single technology platform, to help businesses navigate
the new hybrid workplace. The SaaS technology includes five key aspects -
Desk Management, Workforce Rostering, Demand & Supply, Expenses &
Chargeback, and Asset Management; bringing together key workforce and
workplace considerations for a future-ready solution.

 

Update: The easing of workplace restrictions and the adoption of the hybrid
workplace model has led to a significant increase in sales pipeline, currently
working on more than 800 opportunities globally with significant traction in
the US market, as well as increased deal closures and reduced deployment
timelines. The company sees accelerating growth of the business with Q3
annualised run-rate revenue (ARR) increasing 53% yoy, total contract value
(TCV) increasing 29% yoy, and customer count increasing 247% yoy. In the short
time span since its founding in 2017, the company has expanded its global
presence and currently covers deployments in over 100 cities across 20
countries.

 

August Jewellery Pvt. Ltd. ("Melorra"): Founded in January 2015 by Saroja
Yeramilli, Melorra is an omni-channel fast fashion Indian jewellery company
that introduces a fresh collection of 75 new designs every Friday, resulting
in over 300 new designs per month. Melorra adopts a minimal inventory model
that uses 3-D printing technology to achieve just-in-time manufacturing to
bring products to market efficiently. The company currently has 10 operational
experience centers across India.

Update:  Melorra continued its growth momentum and revenue grew qoq 52.7% and
yoy by 598.5%; September is the Shraddh period in India during which people do
not buy gold. However, despite that Melorra grew by 5% during the month. The
Company was also able to maintain their high gross margins despite cost
pressures. The Company is increasing brand marketing spend in order to grow
awareness of the brand. Melorra's offline stores continued to perform
strongly. The Company opened a new store in Mall of India, Noida, taking the
number of stores in the National Capital Region ("NCR") to 5. Melorra now has
10 stores operational in India. Offline revenues are currently a small
proportion of total revenue and growing.  The Company released a TV
advertisement during the Indian Premier League ("IPL"), one of the most
popular cricket tournaments on the subcontinent, to make consumers aware of
its compliance with the new BIS Hallmarked gold standards. In early October,
Melorra raised US$24 million, as part of a fresh funding round from 9Unicorns,
Value Quest, Venture Catalysts, Param Capital and Family Offices. Symphony
increased its investment in Melorra by  investing an additional US$1.2
million in this round. The funds raised will be used to upgrade the Company's
technology stack, ramp up brand marketing and expand Melorra's experience
centers across India.

 

Good Capital Partners and Good Capital Fund I ("Good Capital"): Good Capital
is majority owned by brothers Rohan and Arjun Malhotra who founded Investopad
in 2014 by investing their own capital into building substantial
infrastructure across India (Delhi, Bangalore and Gurgaon) and creating a
thriving ecosystem of technology startups. Symphony announced its investment
in July 2019, and has a stake in the General Partner, Good Capital Partners
("GCP") and its first fund, Good Capital Fund I ("GCF").

Update:  Good Capital had one capital call in Q3FY21; the cumulatively
deployed capital is US$6.2 million across 15 investments. Good Capital has
exited their investment in SimSim, a social commerce start-up via a sale to
Google. The Fund is expecting a return of 3.9x (approx.) on the investment,
which is greater than all the capital that the Fund has called from LPs till
date. The Fund has made 7 new investments in Q3 and is in closing
conversations with 4 new investments and 2 follow-on rounds into portfolio
companies this quarter. The Fund has realised 90% of the proceeds from the
acquisition of SimSim by Google and is expected to receive the balance 10% in
August 2022.

 

Catbus Infolabs Private Limited ("Blowhorn"): In August 2021, Symphony
invested in Catbus Infolabs Private Limited, the owner of the Blowhorn
platform. Blowhorn is a same-day intra-city last-mile logistics provider
headquartered in Bangalore, India. The company provides seamless
transportation, warehousing, and a fully technologically integrated system to
manage the end-to-end supply chain process through an asset-light
transportation and distributed micro-warehousing network. The company
currently serves enterprise customers in over 70 cities across India.

Update: The growing adoption of e-commerce and direct-to-consumer business
models in India is increasing demand for same-day intra-city logistics
services. A large part of the online consumer experience is linked to the
speed and flexibility of the logistics services. Blowhorn's asset-light
full-stack solution is well positioned to scale and capitalise on this market
opportunity and the company saw steady growth of the business in Q3 with
annualised run-rate revenue (ARR) increasing 32% yoy. Blowhorn has been
recognised for its positive social impact by providing working opportunities
to low-income demographics across India.

House of Kieraya ("HOK"): HOK was founded in October 2012 by Ajith Karimpana
to be a residential furniture rental services business. The company is
headquartered in Bangalore, India. HOK has 4 brands at present, Furlenco is a
subscription-based furniture rental brand; Furbicle, a brand selling
refurbished & recycled furniture; Unlmtd, an annual furniture and
appliance subscription service and Prava, which sells high-end retail
furniture.

 

Update: With the launch of Unlmtd, an affordable upfront payment plan, the
company is seeing customer collections increase significantly. Prava, the
newest brand in the portfolio, was launched in October, and the initial
response from the market has been positive. The company has seen realised
revenues increase by 26.3% qoq.

 

Meesho, Inc ("Meesho"): Meesho, founded in March 2016 in Bangalore, India, is
a social e-commerce platform for micro-entrepreneurs and Medium and Small
Enterprises ("MSME") to sell to the next 500 million Indians coming online.
Vidit Aatrey ("VA"), is the Founder and CEO of the Company and his co-founder
is Sanjeev Barnwal ("SB"). Meesho aims to enable small businesses, including
individual entrepreneurs, to succeed online by bringing a range of products
and new customers onto the Meesho platform. Meesho started as a
reseller-focused platform enabling millions to sell online and has now become
a single ecosystem connecting sellers to consumers and entrepreneurs.

 

Given the size and level of interest in this company's latest funding round,
Symphony would not have been able to receive an allocation to invest. However,
because of our investment in and relationship with Good Capital, who's
founders were angel investors in Meesho, we were able to get an allocation in
an otherwise oversubscribed round.

 

Update: Meesho has entered the food and grocery market, under the brand
'Farmiso', by offering free home delivery on all orders in over 200 plus
non-Tier-1 cities in India. The Company is focused primarily on advertising
revenues rather than commissions from sellers, as distinct from its
competitors. Meesho's unique strategy is leveraging 'community leaders' in
these cities and towns, who will aggregate grocery orders from individual
customers of different ticket sizes through the platform and undertake the
last mile delivery. Through this aggregation of demand and community buying,
the Company projects that even an average ticket size of INR 80-100 each makes
free delivery viable. The Company also intends offer financial services, such
as loans for working capital to help the 'community leaders' make money.
Meesho aims to double its monthly active users ("MAU's) from 50 million
currently to 100 million MAUs by December 2022. The Company recently raised
US$570 million from investors including Fidelity Management & Research
Company and B Capital Group, Softbank, Facebook, amongst others; the Company
has in excess of US$800 million for growing their various lines of business.

 

SUBSEQUENT EVENTS

·    Subsequent to 30 September, Symphony acquired additional shares in
ASG for a total consideration of less than 1% of NAV.

·    Subsequent to 30 September, Symphony sold 4.0 million MINT shares
through a series of market transactions that generated net proceeds of US$ 4.0
million.

·    Subsequent to 30 September, Symphony made an additional investment in
Melorra for a total consideration of less than 1% of NAV.

 

For further information:

Symphony Asia Holdings Pte. Ltd.:

Anil Thadani
     +65 6536 6177

Rajgopal Rajkumar

 

Dealing codes

The ISIN number of the Ordinary Shares is VGG548121059, the SEDOL code is
B231M63 and the TIDM is SIHL.

The LEI number of the Company is 254900MQE84GV5DS6F03.

 

Notes:

NAV takes into account the fair value of unrealised investments. In accordance
with the valuation policies of the Company, real estate related investments
are valued by third parties on 30 June and 31 December each year. In addition
and in accordance with the Company's valuation policies, investments that have
been held for less than 12-months are held at cost unless there is evidence of
a diminution in the value of that investment. Although the investment manager
believes there not to be a diminution in the value of investments held for
less than 12- months, the Covid-19 pandemic has led to a significant increase
in economic uncertainty which is evidenced by more volatile asset prices and
currency exchange rates and therefore cost may not correspond to an
appropriate measure of fair value in the current environment

 

 

 

 

 

 

 

 

IMPORTANT INFORMATION

A more detailed Shareholder Update is available on request from the Company
and can be accessed via www.symphonyasia.com (http://www.symphonyasia.com) .

THIS DOCUMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OR ANY OTHER
JURISDICTION INTO WHICH THE PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.
THESE MATERIALS DO NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE
SOLICITATION OF AN OFFER TO BUY OR ACQUIRE SECURITIES IN THE UNITED STATES OR
ANY OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.
THE SECURITIES REFERRED TO IN THIS DOCUMENT HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES LAWS OF SUCH JURISDICTIONS AND MAY NOT BE
SOLD, RESOLD, TAKEN UP, TRANSFERRED, DELIVERED OR DISTRIBUTED, DIRECTLY OR
INDIRECTLY, WITHIN SUCH JURISDICTIONS.

NO REPRESENTATION OR WARRANTY IS MADE BY THE COMPANY OR ITS INVESTMENT MANAGER
AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION CONTAINED IN THIS
DOCUMENT AND NO LIABILITY WILL BE ACCEPTED FOR ANY LOSS WHATSOEVER ARISING IN
CONNECTION WITH SUCH INFORMATION.

THIS DOCUMENT CONTAINS (OR MAY CONTAIN) CERTAIN FORWARD-LOOKING STATEMENTS
WITH RESPECT TO CERTAIN OF THE COMPANY'S CURRENT EXPECTATIONS AND PROJECTIONS
ABOUT FUTURE EVENTS. THESE STATEMENTS, WHICH SOMETIMES USE WORDS SUCH AS
"ANTICIPATE", "BELIEVE", "COULD", "ESTIMATE", "EXPECT", "INTEND", "MAY",
"PLAN", "POTENTIAL", "SHOULD", "WILL" AND "WOULD" OR THE NEGATIVE OF THOSE
TERMS OR OTHER COMPARABLE TERMINOLOGY, ARE BASED ON THE COMPANY'S BELIEFS,
ASSUMPTIONS AND EXPECTATIONS OF ITS FUTURE PERFORMANCE, TAKING INTO ACCOUNT
ALL INFORMATION CURRENTLY AVAILABLE TO IT AT THE DATE OF THIS DOCUMENT. THESE
BELIEFS, ASSUMPTIONS AND EXPECTATIONS CAN CHANGE AS A RESULT OF MANY POSSIBLE
EVENTS OR FACTORS, NOT ALL OF WHICH ARE KNOWN TO THE COMPANY AT THE DATE OF
THIS ANNOUNCEMENT OR ARE WITHIN ITS CONTROL. IF A CHANGE OCCURS, THE COMPANY'S
BUSINESS, FINANCIAL CONDITION AND RESULTS OF OPERATIONS MAY VARY MATERIALLY
FROM THOSE EXPRESSED IN ITS FORWARD-LOOKING STATEMENTS. NEITHER THE COMPANY
NOR ITS INVESTMENT MANAGER UNDERTAKE TO UPDATE ANY SUCH FORWARD LOOKING
STATEMENTS

STATEMENTS CONTAINED IN THIS DOCUMENT REGARDING PAST TRENDS OR ACTIVITIES
SHOULD NOT BE TAKEN AS A REPRESENTATION THAT SUCH TRENDS OR ACTIVITIES WILL
CONTINUE IN THE FUTURE. THE INFORMATION CONTAINED IN THIS DOCUMENT IS SUBJECT
TO CHANGE WITHOUT NOTICE AND, EXCEPT AS REQUIRED BY APPLICABLE LAW, NEITHER
THE COMPANY NOR THE INVESTMENT MANAGER ASSUMES ANY RESPONSIBILITY OR
OBLIGATION TO UPDATE PUBLICLY OR REVIEW ANY OF THE FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN. YOU SHOULD NOT PLACE UNDUE RELIANCE ON FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE OF THIS ANNOUNCEMENT.

THIS DOCUMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN
INVITATION OR OFFER TO UNDERWRITE, SUBSCRIBE FOR OR OTHERWISE ACQUIRE OR
DISPOSE OF ANY SECURITIES OF THE COMPANY IN ANY JURISDICTION. ALL INVESTMENTS
ARE SUBJECT TO RISK. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RETURNS.
SHAREHOLDERS AND PROSPECTIVE INVESTORS ARE ADVISED TO SEEK EXPERT LEGAL,
FINANCIAL, TAX AND OTHER PROFESSIONAL ADVICE BEFORE MAKING ANY INVESTMENT
DECISIONS.

THIS DOCUMENT IS NOT AN OFFER OF SECURITIES FOR SALE INTO THE UNITED STATES.
THE COMPANY'S SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED OR SOLD IN THE
UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION. THERE
WILL BE NO PUBLIC OFFER OF SECURITIES IN THE UNITED STATES.

NEITHER THE CONTENT OF THE COMPANY'S WEBSITE (OR ANY OTHER WEBSITE) NOR THE
CONTENT OF ANY WEBSITE ACCESSIBLE FROM HYPERLINKS ON THE COMPANY'S WEBSITE (OR
ANY OTHER WEBSITE) IS INCORPORATED INTO, OR FORMS PART OF, THIS DOCUMENT.

TO ENSURE THE COMPANY'S COMPLIANCE WITH SUB-SECTION 8(3)(A)(I) OF THE PRIVATE
INVESTMENT FUNDS REGULATIONS, 2019, THE DIRECTORS WILL KEEP THE FINANCIAL
SERVICES COMMISSION OF THE BRITISH VIRGIN ISLANDS INFORMED OF THE NUMBER OF
SHAREHOLDERS ON THE COMPANY'S REGISTER OF SHAREHOLDERS.

THE COMPANY AND THE INVESTMENT MANAGER ARE NOT ASSOCIATED OR AFFILIATED WITH
ANY OTHER FUND MANAGERS WHOSE NAMES INCLUDE "SYMPHONY", INCLUDING, WITHOUT
LIMITATION, SYMPHONY FINANCIAL PARTNERS CO., LTD.

End of Announcement

 

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