REG - Symphony Int Hdgs - Shareholder Update

Symphony International HoldingsAnnouncement

18/03/2022 07:00

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RNS Number : 1910F  Symphony International Holdings Ltd  18 March 2022

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

 

18 March 2022

 

Dear Shareholders,

 

·    Symphony International Holdings Limited's ("Symphony" or the
"Company") unaudited Net Asset Value ("NAV") at 31 December 2021 was
US$488,752,262 and NAV per share was US$0.9521. This compares to NAV and NAV
per share at 30 September 2021 of US$400,446,457 and US$0.7800, respectively.
The 22.1% quarter over quarter  growth in NAV is due to an increase in the
value of unlisted investments, particularly in the logistics, healthcare and
lifestyle segments.

·    Symphony's share price continued to trade at a discount to NAV, which
widened during the quarter as a result of the increase in NAV. At 31 December
2021, Symphony's share price was US$0.41, representing a discount to NAV per
share of 56.9%. This compares to a share price discount to NAV of 44.6% at 30
September 2021.

 

We would like to highlight some of the key developments in our portfolio
companies ahead of the regular quarterly shareholder update for the fourth
quarter of 2021.

 

·    Minor International Public Company Limited ("MINT") saw a strong
rebound in core revenue  by 88.5% in 4Q21 year on year due to the reduced
movement and travel restrictions that benefited MINT's hospitality and F&B
businesses. Management are optimistic that the recovery will continue to gain
strength with the further relaxing of border restrictions and higher
vaccination rates

·    Soothe Healthcare Private Limited ("Soothe") sales for the 3-month
period ending 31 December 2021 were 116.1% higher than the same period a year
earlier. The growth has been driven by strong sales of diapers, which grew by
300.0% during the same comparative period and accounted for almost half of
total sales in December 2021

·    The Liaigre Group ("Liaigre") continued to see positive growth with a
21.1% increase in sales for the 12-month period ended 31 December 2021
compared to the same period a year earlier. Liaigre saw record sales in
December 2021 and new orders during the year grew by 25.7% which was driven by
showrooms across all geographies with Asia almost doubling

·    In 4Q21 CHANINTR reported a 28.0% increase in order book, a leading
indicator of growth in its business. EBITDA grew 94.6% year on year due to
higher sales recorded driven by higher volumes of products sold

·    The ITL group continued to see strong performance and reported
revenue and EBITDA growth of 104.1% and 209.3% in 2021, respectively. The
growth was driven by the full consolidation of the Port owner and operator,
South Logistics Joint Stock Company ("SoTrans"), which was acquired in June
2020, aviation GSA and freight forwarding services

·    Smarten Spaces Pte. Ltd ("Smarten") saw Q4 annualised run-rate
revenue increase by 58.8% year on year, total contract value ("TCV")
increasing 36.7% year on year, and customer count increasing 160.0% year on
year

·    August Jewellery Pvt. Ltd. ("Melorra") revenue grew 23.2% quarter on
quarter and 200.8% year on year, driven by online sales, 11 offline experience
centers and strong growth on marketplace platforms

·    House of Kieraya ("HOK") reported a 55.6% quarter on quarter increase
in adjusted booked revenue driven by the shift from monthly subscription to
3-6-9 month plans, where the entire money is collected upfront

·    Meesho, Inc. ("Meesho") reported its first US$1 billion GMV quarter
driven by 3.7x year on year growth in orders; since launching Farmiso, the
company's entry into the grocery segment in September 2021, the company has
taken it across 49 towns in India

 

 

MARKET OVERVIEW AND OUTLOOK

The global economy enters 2022 in a weaker position than previously expected.
Rising energy prices and supply disruptions have resulted in higher and more
broad-based inflation than anticipated, notably in the United States and many
emerging market and developing economies. The Russia-Ukraine war has
unfortunately created negative economic implications globally and we are yet
to understand the full ramifications of this crisis.

The IMF has reduced their estimates for global growth from 5.9% in 2021 to
4.4% in 2022; this one and a half percentage point reduction from the October
World Economic Outlook ("WEO") is largely due to reduced growth forecasts for
the US (-1.2%) and China (-0.8%), respectively. This change is attributable to
earlier withdrawal of monetary policy accommodation and continued supply
shortages in the US, while China's pandemic-induced disruptions related to the
zero-tolerance Covid-19 policy and protracted financial stress in the property
sector. It should be noted that this forecast is conditional on adverse health
outcomes declining to low levels in most countries by end-2022, assuming
vaccination rates improve worldwide and therapies become more effective.

The overall forecast for India is positive, but higher global inflation and
slowing growth could increase policy complications. The IMF has projected that
India will grow 9.0% in the current fiscal year. However, since the economy
expanded 13.7% in the first half of the year, the second half is expected to
have slowed to under 5.0%. The first half of the next fiscal year, starting in
April 2022, would again see higher growth as economic activity suffered during
the second wave of the pandemic. Raghuram Rajan, the former head of the
Reserve Bank of India, said India needs to recalibrate its response to the
price situation following disruptions in global supply chains on account of
the Russia-Ukraine war, as losing the battle against inflation neither serves
the government nor the central bank. The retail inflation rate breached the
6.0% upper tolerance limit of the RBI for the first time in seven months in
January, while the wholesale-price index stayed in double-digits for the 10th
month in a row.

 

In Thailand, the Finance Ministry maintained its forecast for 2022 GDP growth
at 4.0%, according to Pornchai Thiraveja, director general of the ministry's
fiscal policy office. It also revised its 2021 estimate to 1.2% expansion from
1.0%, supported by exports and fiscal measures. Southeast Asia's
second-largest economy has tried to support a fragile recovery by reopening
its borders to foreigners after the pandemic wreaked havoc on the crucial
tourism sector over the past two years. The government announced a
quarantine-free visa program
(https://www.bloomberg.com/news/articles/2022-01-20/thailand-to-resume-quarantine-free-tourism-as-covid-cases-ease)
starting in February 2022, after pausing since late December on concerns about
the Omicron variant.  Still, the total of 427,869 foreign visitors in 2021
was a fraction of the 40 million who came in 2019, which generated more than
US$60 billion in revenue for the tourism industry.

 

Vietnam ended 2021 with a 2.6% growth in GDP, despite the nation going through
an extended lockdown in the second half of last year, causing serious economic
ramifications. Vietnam has experienced what has been referred to as a
'K-curve' effect, meaning different industries have been impacted in different
ways. For example, while tourism, hospitality and food services have suffered,
export-based sectors for Vietnam have shown resilience over the past two
years. Given the latest Regional Comprehensive Economic Partnership (RCEP) has
come into effect on 1 January 2022, the trading relations with global markets
will continue to improve and will enable Vietnam to become one of the
fastest-growing ASEAN countries with the IMF projecting a GDP growth 6.6% for
2022.

 

While we see our investee companies benefiting from the gradual lifting of
restrictions, there are heightened risks on the horizon, including inflation,
geopolitical tensions and the possibility of new Covid-19 variants that may
again upend economies. Aside from the potential impact from these risks, we
believe our investee companies are well positioned for future growth.

 

 

COMPANY UPDATE

During the quarter, Symphony completed the second tranche investment in
SolarSquare Energy Private Limited ("Solar Square"), a rooftop solar power
company that focuses on residential homes in India. In addition Symphony made
follow on investments in WCIB International Co. Ltd. ("WCIB") and Melorra and
acquired secondary shares in ASG Hospitals Pvt. Ltd. ("ASG") during the
quarter.

Symphony's listed investments accounted for 13.9% of NAV at 31 December 2021
(or US$0.1324 per share), which compares to 19.3% of NAV (or US$0.1505 per
share) at 30 September. The percentage change is due to an increase in the
value of the unlisted portfolio, the sale of 4.0 million Minor International
Public Company Limited ("MINT") shares during the quarter and an 8.8% decline
in the share price of MINT.

The value of Symphony's unlisted investments (including property) comprised a
further 88.2% of Symphony's NAV (or US$0.8399 per share), which compares to
84.4% (or US$0.6587 per share) at 30 September 2021. The percentage change is
predominantly due to the increase in value of ITL during the quarter, an
appreciation in the Thai baht and other movements in the value of unlisted
investments.

Temporary investments accounted for (2.1%) of NAV (or negative US$0.0203 per
share), which compares to (3.7%) of NAV (or negative US$0.0291 per share) per
share at 30 September 2021. The percentage change is due to 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  31
December 2021, Symphony's share price was US$0.41, representing a discount to
NAV per share of 56.9%. This compares to a share price discount to NAV of
44.6% at 30 September 2021.

PORTFOLIO DEVELOPMENTS

HOSPITALITY

 

Minor International Public Company Limited ("MINT"): 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 527 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 56 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 2,389 outlets system-wide in 24
countries under The Pizza Company, Benihana, Swensen's, Sizzler, Dairy Queen,
Burger King, Riverside, Thai Express, The Coffee Club, Bonchon, Coffee Journey
amongst others. MINT is one of Thailand's largest distributors of lifestyle
brands and contract manufacturers. Its brands include Anello, BergHOFF,
Bossini, Charles & Keith, Esprit, Joseph Joseph, Radley, Zwilling and J.A.
Henckels.

 

Symphony has invested a total of US82.8 million in MINT and we have received
proceeds of approximately US$308.3 million through dividends and realizations
of capital gains. As such our net investment cost of this investment  stands
at negative US$225.5 million. MINT has been one of our best investments.

 

Update: MINT reported a strong rebound in core revenue by 88.5% in 4Q21
compared to the same period last year. This was attributable to a strong
rebound of hotel business in all geographies from higher travel activities and
low base effect of last year, together with growing operational business of
Minor Food.

 

In 4Q21, core revenue from hotel and related services improved due to strong
rebound of demand and travel activities in all geographies, subsidies from
European governments and the reopening of hotels, together with the low base
last year. In 4Q21 MINT also reported an increase in management income,
doubling year on year due to the same reason as mentioned above despite the
exit of some hotel management contracts during the year.

 

At the end of 4Q21, MINT's total restaurants reached 2,389 outlets, comprising
of 1,205 equity-owned outlets and 1,184 franchised outlets. The
total-system-sales (including sales from franchised outlets) increased 6.0%
year on year was attributable to store expansion in China and Thailand hubs
which mitigated the softer performance in Australia. Core EBITDA in 4Q21
remained in the black but decreased by 7.0% year on year with core EBITDA
margins decreasing slightly to 23.3% in 4Q21, compared to 4Q20 EBITDA margin
of 25.7%. The stronger profitability of Australia hub did not fully mitigate
the softer profitability of Thailand and China hubs.

 

Revenue from MINT's retail trading and contract manufacturing businesses
declined by 10.0% year on year during 4Q21 but improved by 84.0% quarter on
quarter. The strong sales growth of home and kitchenware business, together
with e-commerce, particularly Charles & Keith standalone website could
only partially help alleviate the softer performance of fashion and
manufacturing units. Meanwhile the substantial operational improvement quarter
on quarter was a result of easing Covid-19 restrictions in Thailand which led
to higher operating activities and the reopening of stores as outlets of
fashion and home and kitchen brands in certain locations were ordered to be
shut down to control the Covid-19 transmission in 3Q21.

 

The value of Symphony's investment in MINT decreased from US$77.3 million at
30 September 2021 to US$68.0 million at 31 December 2021. The change in value
is due to the sale of 4.0 million shares (generating US$4.0 million in net
proceeds) and a decline in MINT's share price by 8.8%, which were marginally
offset by a 1.3% appreciation of the onshore Thai baht.

 

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 31 December 2021, Minuet held approximately 29
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: The value of Symphony's interest at 31 December 2021 was US$69.8
million based on an independent third party valuation and adjusting for
contracted land sales that will be completed in 2022. This compares with
US$65.4 million at 30 September 2021. The change in value is predominantly due
to a 5.8% increase in the underlying value of Minuet's land and an
appreciation in the Thai baht by 1.5%, which were partially offset by other
minor movements in assets and liabilities of Minuet.

Symphony's original investment in Minuet was $78.3 million. We have since
received a total of approximately US$60.5 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.

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 31 December 2021 had received aggregate distributions of
approximately US$13.7 million (correction from US$20.2 million disclosed in
the Q3 2021 Shareholder Update, which also included the fair value of the SG
Land investment).

Update: The value of SG Land as at 31 December 2021 was US$5.8 million based
on an independent third-party valuation. The change in valuation from US$6.5
million at 30 September 2021 is predominantly due to a 15.5% lower property
valuation due to a reduced lease term used to derive fair value that was
partially offset a 1.5% appreciation in the Thai baht. We expect to continue
to receive attractive returns for the remaining duration of approximately 1.8
and 3.9 years for each of the tower leases, respectively. By the end of the
lease terms, Symphony is expected to realise an annualised return for this
investment in the low teens over a period of approximately 18 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:  The project remains 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 its wholly-owned development, which land was
acquired from the Niseko JV, and has achieved sale prices that are amongst the
highest in Niseko. This is indicative of the continued demand for luxury
property in the area. The Niseko JV continues to also explore options for the
residual land that is not being developed and continues to hold.

 

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: The One&Only Desaru Coast Resort saw a pickup in occupancies in
the last quarter of 2021 following the lifting of interstate movement controls
for vaccinated travellers in October. The domestic demand alone for luxury
leisure trips raised the resorts occupancy to EBITDA break-even levels. The
gradual opening-up to international travel with vaccinated travel lanes with
Singapore in January 2022 and potentially Thailand is positive news for the
domestic tourism market that should benefit this property. The management team
is preparing to launch the marketing for the luxury villa sales on the
property that will provide incremental value to Symphony in the coming years.

Phuket Luxury Villa: Symphony exited its interest in a luxury villa in Phuket
during 4Q21 that generated proceeds of US$5.4 million. 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 overall
annualised return and times money from the structured loan transaction
(including the villa sale) is 14.44% over a period of approximately eight
years and 1.94 times our cost, respectively.

 

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 43 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 through to July 2020 and
subsequently acquired secondary shares in October 2021 that in aggregate
provided a 19.80% interest in the business.

 

Update: ASG's operations continued to grow organically and inorganically that
allowed the group to achieve record revenue in December 2021. Net revenue in
4Q21 was 95.4% higher than the same period a year earlier. EBITDA grew by
286.1% during the same comparative period due to the ramp-up of operations at
newer clinics and increased operating leverage. In February 2022, ASG was
approved by creditors to acquire Vasan Health Care Private Limited, which has
around 90 clinics mainly in southern India. The acquisition is subject to
regulatory approval and if successful, will add considerable scale to ASG's
operations.

 

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: Soothe's revenue for the three month period ended 31 December 2021
was 116.1% higher than the same period a year earlier. The growth has been
driven by strong sales of diapers, which grew by 300.0% during the same
comparative period and accounted for almost half of total sales in December
2021. Soothe is expects to materially expand its margins in the coming year
with the inhouse production of diapers starting in 1Q 2022.

 

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 27 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:  Liaigre's performance continued to improve in 4Q 2021 with record
sales achieved in December 2021. Full year 2021 sales were 21.1% higher
compared to the prior year, which was driven by the delivery of interior
design and architecture projects and furniture orders from showrooms in Asia.
New orders during the year grew by 25.7% and was driven by showrooms across
all geographies with Asia almost doubling. This contributed to a large order
book at 31 December 2021 that accounted for 56% of 2022 budgeted sales.
Management is optimistic given the strong momentum in the business and is
focused on initiatives to expand manufacturing capacity and improve delivery
times.

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 Q4 2021 CHANINTR saw a 28% yoy increase in sales closed and a 24%
yoy increase in sales recorded. The company exceeded targets for sales closed;
however, the company fell short of the target of sales recorded due to
Covid-19 and longer lead times from their suppliers. EBITDA grew 94.6% yoy due
to higher sales recorded driven by higher volume of products sold. The company
is witnessing robust demand due to Covid-19 leading to work-from-home or
people spending more time at home and hence renovating or upgrading their
houses. Furthermore, the demand for residential real estate in Bangkok has
increased and this has also led to increasing demand for branded furniture.
However, the company has witnessed rising costs due to supply bottlenecks from
container availability, delays, and inflation. Based on the success of Pergo
in Bangkok, the office furniture rental business, the company aims to take
this product line across Thailand. The company has also launched Spruce, a
subscription-based brand concept for staging and remodelling apartments by
real estate developers.

 

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 70 outlets in Singapore, Thailand,
Malaysia and South Korea.

 

Update: Operating environment in the two core markets, Thailand and
Singapore, remain challenged from COVID-19 restrictions and related economic
weaknesses. Certain restrictions were eased in Q4 which led to a 46% qoq
increase in total revenue. The retail business remains strong with FY2021
Total System Sales Growth (TSSG) of 13.9% in Singapore (11.5% SSSG) and 11.4%
in Thailand (19.2% SSSG).

 

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: Following an extended period of remote learning since April 2021,
students returned to campus on 25 October 2021 with government approval to
reopen based on robust Covid-related protocols. WCIB has also seen a
significant increase in inquiries and tours by prospective families since
November. The school is forecast to deliver an operating profit in the next
academic year.  Subsequent to the year-end, Symphony made a follow-on
investment in WCIB that amounted to less than 1% of NAV.

 

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 4Q21 grew by 85.1% and 238.0%, respectively,
compared to the same period a year earlier. The growth in revenue is
predominantly due to existing mandates with the Abu Dhabi Education Counsel
("ADEK"). Management continue to focus on rebuilding K12 and growing the
higher education businesses to further diversify revenue streams.

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. Following a subsequent issue of shares and share buyback by ITL,
Symphony's interest is 27.7%.

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 and reported
revenue and EBITDA growth of 104.1% and 209.3% in 2021, respectively. The
growth was driven by the full consolidation of the Port owner and operator,
South Logistics Joint Stock Company ("SoTrans"), which was acquired in June
2020, aviation GSA and freight forwarding services. The management team is
focused on enhancing its technology infrastructure and making new investments
in port assets, logistics parks, delivery fleets and new verticals, such as
cold chain, that will continue to add value over the medium to long-term.

 

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 four 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 for the
company, currently working on more than 800 opportunities globally.

 

The company has seen increasing deal closures with significant traction in the
US market, which represents 45% of new revenue, as well as reduced deployment
timelines. This has led to a steady growth of the business with Q4 annualised
run-rate revenue (ARR) increasing 58.8% yoy, total contract value (TCV)
increasing 36.7% yoy, and customer count increasing 160% yoy. The company's
global presence currently spans 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 11 operational
experience centers across India.

Update:  Melorra opened its 11(th) offline experience center in December at
Forum Mall, Koramangala, Bangalore. With this store, the Company now has 3
centers operational in Bangalore. Offline grew despite walk-ins in all malls
reducing towards the end of December 2021 due to the Omicron wave that was
spread across India; malls in Delhi, where the Company has 5 centers, opening
only on odd or even days. The online business also grew with an all-time high
of 4.8 million visitors coming to the platform or via the app. The marketplace
platforms, which include Flipkart, Amazon and Reliance Jio, all saw record
sales of Melorra products. The Company has seen strong traction on the
marketplace platforms over the last 12 months and expects this channel to
continue to grow.

 

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 no capital calls in Q4FY21; the cumulatively
deployed capital is US$6.7 million across 9 investments and 10 Bharat Founders
Fund investments. Good Capital has closed two investments in the quarter, the
first is Solar Square, a residential solar brand based in Mumbai, India and
the second is Tamasha, a micro-influencer-led live gaming platform where users
play games as part of a community to win prizes. The platform enables creators
to earn an income while running live games with a small audience. This
incentivises game-leaders to manage and build engagement within their own
communities.

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.

Update: Blowhorn has seen a steady growth of the business, fuelled by strong
tailwinds in the e-commerce space, increasing the annualised run-rate revenue
(ARR) by 36% yoy. The company is continuously expanding its presence and is
currently serving enterprise customers in over 100 cities across India
providing 250,000 deliveries daily.

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: The House of Kieraya ("HOK") officially launched Prava in December
2021 through a fashion show held in Bangalore, India. The initial response in
the media was very positive. The company continues to see UNLMTD, the 12-month
subscription plan where there entire money is collected upfront, performing
well with month-on-month growth in November and December of 31.5% and 20.3%,
respectively. The Furlenco brand is meeting expectations post the shift from
monthly subscription to 3-6-9 month plans, where the entire money is also
collected upfront.

 

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: During the Diwali month of October Meesho achieved an annualised- run
rate revenue of US$5 bn while Q4FY21 was the first US$1bn gross merchandise
value ("GMV") quarter driven by 3.7x yoy growth in orders and 9.2x growth in
monthly transacting users ("MTU"s). The Company has expanded its business
model from a reseller focused operation to include direct-to-consumer and is
now targeting the mass e-commerce market in select categories like fashion and
home. The monthly orders in December is 57.6 million and the number of monthly
users is 23.7 million. The Company has seen its zero-commission structure for
resellers on its platform meeting tremendous success as the number of sellers
registering on the platform has increased 4.5x in the last 12 months. Like
Alibaba in China, Meesho aims to monetize the seller base by charging for
advertising based on the clicks a post receives. The Company has also seen its
referral program, where a referrer receives a cash payout of INR 2,300 per
sale made by the referee for the first 3 orders and 1% of gross value of all
sales made that year, increasing the number of sellers on its platform. The
Company's entry into the grocery segment has met with early success. Since
launching in September in 20 towns, Farmiso is currently present in 49 towns
across India. The Company believes they have found product-market-fit with
their initial towns as they are self-sustaining with minimal marketing
expenditure.

 

SolarSquare Energy Private Limited ("Solar Square"): Solar Square was founded
in 2015 by Neeraj Jain and Nikhil Nahar. They have since been joined by Shreya
Mishra to refocus the company on the consumer space. Solar Square is a rooftop
solar power company that focuses on residential homes, primarily standalone
houses, gated societies, and small commercial centres. The company aims to
make clean energy affordable and accessible and become the trusted brand in
the space.

 

Update: In December 2021, the Company closed a seed financing round of US$4
million. This will enable the Company to increase marketing spend, purchase
inventory and enter new markets. The Company is currently present in Madhya
Pradesh and Karnataka and is entering new markets like Rajasthan and
Maharashtra.

 

SUBSEQUENT EVENTS

·    Subsequent to 31 December, Symphony completed a follow-on investment
in WCIB International Co. Ltd. for the ongoing phased development of the
school. The investment amounted to less than 1% of the Company's 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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