REG - Symphony Int Hdgs - Shareholder Update

Symphony International HoldingsAnnouncement

20/12/2022 07:00

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RNS Number : 2123K  Symphony International Holdings Ltd  20 December 2022

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

 

20 December 2022

 

Dear Shareholders,

 

 

 ·         Symphony International Holdings Limited's ("Symphony" or the "Company")
           unaudited Net Asset Value ("NAV") at 30 September 2022 was US$444,576,566 and
           NAV per share was US$0.8660. This compares to NAV and NAV per share at 30 June
           2022 of US$482,693,268 and US$0.9403, respectively. The decrease of 7.90%
           quarter over quarter  in NAV is predominantly due to a decrease in the value
           of Minor International Pcl Limited ("MINT") (which has since partially
           recovered), an overall decrease in the value of unlisted investments and
           depreciation in the onshore Thai baht and Indian rupee.
 ·         Symphony's share price continued to trade at a discount to NAV. At 30
           September 2022, Symphony's share price was US$0.44, representing a discount to
           NAV per share of 49.2%. This compares to a share price discount to NAV of
           53.2% at 30 June 2022.

 

We would like to highlight some of the key developments in our portfolio
companies during the quarter:

 

 ·         MINT reported strong business recovery across all regions fuelled by easing
           travel restrictions globally, an increase in average room rate as well as the
           reopening of hotels that were temporarily closed in the previous year. In Q2
           and Q3 2022, MINT announced additions to the Anantara portfolio, including the
           Anantara Downtown Dubai Hotel and the upcoming Anantara Mamucabo Bahai Resort
           in Brazil. MINT's share price on September 30, 2022 was THB 26.5 but has since
           increased to THB 31.50 on December 16, 2022.
 ·         ASG Hospitals Private Limited ("ASG") completed a capital raise which will
           provide new capital to facilitate further growth and acquisitions. Symphony
           sold approximately 35% of its shareholding in ASG that generated net proceeds
           of approximately US$17.0 million or 82.3% of our total investment cost.
 ·         Soothe Healthcare Private Limited ("Soothe") sales in the month and for the
           quarter ending 30 September 2022 increased by 10.5% and 23.1% compared the
           same respective periods a year earlier. Overall, sales growth has slowed as
           the company increases focus on improving margins. In October, the US
           Development Finance Corporation (DFC) agreed to provide US$7.7 million loan
           guaranty to Soothe as part of initiatives to address challenges faced by
           emerging markets around the world.
 ·         The Liaigre Group ("Liaigre") year-to-date orders remained largely flat
           year-over-year due to weaker than expected performance by European showrooms
           and Design Services. However, the interior architecture business continues to
           win new projects and scale operations while easing covid-related restrictions
           in recent months has resulted in a pick-up in business in Shanghai.
 ·         The ITL group reported YTD performance has been quite good with the full year
           EBITDA budget being met; however, the outlook for the next few quarters is
           somewhat clouded due to weaker aviation and freight sectors. A minority
           shareholder in ITL, Franklin Templeton,  completed the sale of its interest
           in Q3 2022 to Mitsubishi Logistics Corporation ("MLC").
 ·         August Jewellery Pvt. Ltd. ("Melorra") had a strong third quarter with the
           Diwali month of October being especially strong. The company grew sales during
           the Diwali period by 113% over the prior year against the industry growth of
           20%. The company opened its 23rd store in Patna, India; the offline channel
           has turned profitable in October.
 ·         Kieraya Furnishing Solutions Private Limited ("HOK") saw growth remaining
           steady in Q3 2022 as inventory and marketing spend was reduced to conserve
           cash pending a planned new capital raising.

 

 

 

MARKET OVERVIEW AND OUTLOOK

The third quarter of 2022 saw the global economy continuing to face steep
challenges, shaped by the lingering effects of the Russian invasion of
Ukraine, persistent and broadening inflation pressures and the slowdown in
China. The International Monetary Fund's ("IMF") October 2022 report forecasts
global growth to remain unchanged in 2022 at 3.2% and to slow to 2.7% in 2023
or 0.2 percentage points lower than the July forecast. More than a third of
economies globally will contract this year or next, while the three largest
economies (the United States, the European Union, and China) are expected to
slow considerably.

In China, the frequent lockdowns under its zero Covid-19 policy have taken a
toll on the economy, especially in the second quarter of 2022. In China,
economic growth is projected to decline to 3.2% in 2022 (the lowest growth in
more than four decades, excluding the initial Covid-19 crisis in 2020), and
 expected to rise to 4.4% in 2023. Furthermore, the property sector,
representing about one-fifth of economic activity in China, is rapidly
weakening. Given the size of China's economy and its importance for global
supply chains, this is expected to continue to weigh heavily on global trade
and activity. There is some indication that the Chinese government is moving
towards more pro-growth policies. In Q4 2022, New measures were announced to
rescue the property sector and to ease some zero-Covid policy restrictions.

Meanwhile in India, the Reserve Bank of India ("RBI") in its September meeting
revised its growth forecast lower to 7% from 7.2% earlier. However, Chetan
Ahya, the chief Asia economist at Morgan Stanley, forecasts that India will be
the third-largest economy by 2027, with its GDP more than doubling from the
current US$3.4tn to US$8.5tn over the next 10 years. Incrementally, India will
add more than $400bn to its GDP every year, a scale that is only surpassed by
the US and China. Furthermore, India's market capitalisation will rise from
US$3.4tn to US$11tn by 2032, the third largest globally. These projections are
underpinned by a confluence of favourable domestic and global forces,
including the introduction of the goods and services tax which creates a
unified domestic market; corporate tax cuts; and production-linked schemes to
incentivise investment from both within and outside India's borders.
Overlaying this is the accelerating diversification of multinationals'
production outside of China to avoid supply chain breakdowns due to zero-covid
restrictions, with India emerging as a destination of choice.

In Thailand, the Finance Ministry maintained its GDP forecast at 3.5% in 2022
underpinned by increased domestic consumption, tourism and exports, despite
higher inflation. Thailand's Finance Ministry anticipates the recovery will be
supported by a pick-up in the vital tourism sector. The tourism-dependent
country has already received 10 million foreign tourist arrivals in 2022, up
from 6 million projected three months ago. However, while this is still lower
than the 40 million foreign tourist arrivals in 2019, the increase in tourist
arrivals should benefit our portfolio, particularly our holding in Minor
International Pcl ("MINT").

 

In Vietnam the General Statistics Office ("GSO") released Q3 2022 data showing
GDP rose 13.67% which is a record, making it the highest growth rate in Asia
this year. The World Bank attributed Vietnam's rebound to a recovery of
exports and the release of pent-up demand following the removal of Covid-19
related mobility restrictions and, more recently, the gradual return of
foreign tourists. Vietnam's economic growth was reported in all three key
sectors, of which services increased by 10.6%, industry-construction up 9.6%
and agriculture-forestry-fishery up 3.0%. Our holding in Indo Tran Logistics
Corporation ("ITL Logistics") stands to benefit from the country's positive
growth momentum.

During the third quarter, Symphony completed follow-on investments in Catbus
Infolabs Private Limited ("Blowhorn"), Niseko Property Joint Venture, WCIB
International Co. Ltd, while making a partial exit in ASG Hospitals Private
Limited. As we enter the last quarter of 2022 challenges remain, however our
portfolio companies continue to perform well while staying focused on their
respective long term strategies. We continue to work closely with our investee
companies to advise on strategy, financial and operational aspects of their
businesses and fundraising. Although we remain cautious in the current
environment, we are optimistic that our portfolio companies are well placed to
grow and increase in value.

COMPANY UPDATE

Symphony's listed investments accounted for 11.1% of NAV at 30 September 2022
(or US$0.0964 per share), which compares to 14.2% of NAV (or US$0.1336 per
share) at 30 June 2022. The percentage change is predominantly due to a 6.7%
depreciation in the onshore Thai baht and the sale of shares along with a
decrease in share price of Minor International Public Company Limited ("MINT")
by 21.5% during the quarter. MINT has since recovered from THB 26.5 on
September 30, 2022 to THB 31.75 on December 16, 2022.

The value of Symphony's unlisted investments (including property) comprised a
further 87.4% of Symphony's NAV (or US$0.7563 per share), which compares to
87.5% (or US$0.8226 per share) at 30 June 2022. The percentage change is
predominantly due to a decrease in the valuation of unlisted investments and
the depreciation in the Indian Rupee.

Temporary investments accounted for 1.5% of NAV (or US$0.0133 per share),
which compares to (1.7%) of NAV (or negative US$0.0159 per share) per share at
30 June 2022. The percentage change is due to the increase in cash amount
resulting from the sale of ASG shares.

Symphony's share price continued to trade at a discount to NAV. At 30
September 2022, Symphony's share price was US$0.44, representing a discount to
NAV per share of 49.2%. This compares to a share price discount to NAV of
53.2% at 30 September 2022.

PORTFOLIO DEVELOPMENTS

HOSPITALITY

 

Minor International Public Company Limited ("MINT"): As at 30 September 2022,
MINT owned 366 hotels and managed 163 other hotels and serviced suites with
76,306 rooms in 56 countries predominantly under its own brand names that
include Anantara, Oaks, NH Collection, NH Hotels, nhow, Elewana, AVANI, Per
AQUUM and Tivoli.  MINT also owned and operated 2,484 restaurants under the
brands The Pizza Company, Swensen's, Sizzler, Dairy Queen, Burger King,
Beijing Riverside, Thai Express, Bonchon, Benihana and The Coffee Club amongst
others. MINT's operations also include contract manufacturing and an
international consumer brand distribution business in Thailand focusing on
fashion and lifestyle retail (306 outlets), wholesale and direct marketing
channels under brands that include Bossini, Charles & Keith and Radley
amongst others.

 

Company Update: In 3Q 2022, MINT reported a profit of Baht 4.6 billion for Q3
2022 compared to a loss of Baht 436 million during the same period a year
earlier. On a core basis, excluding non-recurring items, MINT posted core
profit of Baht 2.0 billion in Q3 2022, exceeding Q3 2019 pre-pandemic levels
for all three business units. Mr. Dillip Rajakarier, Group CEO of MINT,
commented, "Such positive momentum should allow us to overcome macroeconomic
pressures. Together with prudent resource management, we are optimistic that
we will continue to deliver strong results in 2023 with increased margins."

 

MINT Hotel's strong business recovery was across all regions and fuelled by
easing travel restrictions globally, an increase in average room rate as well
as the reopening of hotels that were temporarily closed in the previous year.
In Q2 and Q3 2022, MINT announced additions to the Anantara portfolio,
including the Anantara Downtown Dubai Hotel and the upcoming Anantara Mamucabo
Bahai Resort in Brazil.

Minor Food's core profit improved as a result of increased dining-in activity,
better efficiency and innovative products. The China hub returned to
profitability during Q3 2022, as a result of easing of COVID-19 measures in
key cities since June 2022.  Thailand and Australia hubs continued to deliver
improved performance too that contributed to group-wide same-store-sales
growth of 16.6% and total system sales growth of 41.3% during the quarter
year-over-year.

 

Minor Lifestyle turned a core profit during the third quarter as a result of
higher retail store traffic and increased operational efficiency.

 

Symphony's gross investment cost in MINT was US$82.8 million at 30 September
2022. The net cost on the same date, after deducting partial realisations and
dividends received, was (US$234.5 million). The negative net cost is due to
the proceeds from partial realisations and dividends being in excess of cost
for this investment. The fair value of Symphony's investment in MINT at 30
September 2022 was US$49.5 million. The change in value from US$68.6 million
at 30 June 2022 is predominantly due to a 21.5% decline in MINT's share price
(reflective of weaker financial markets in general), a 6.7% depreciation of
the Thai baht onshore rate and the sale of one million shares at an average
price of THB34.0 that generated net proceeds of US$940,000.

 

Since September 30, 2022 MINT's share price has recovered to THB 31.50 on
December 16, 2022. At this price, the value of Symphony's holding in MINT is
equal to US$63.1 million at the current Thai baht exchange rate.

 

LIFESTYLE/ REAL ESTATE

 

Minuet Limited ("Minuet"): is a joint venture between the Company and an
established Thai partner. The Company has a direct 49% interest in the venture
and is considering several development and/or sale options for the land owned
by Minuet, which is located in close proximity to central Bangkok, Thailand.
As at 30 September 2022 Minuet held approximately 186.75 rai (29.88 hectares)
of land in Bangkok, Thailand.

 

Company Update: The area around the Minuet property in Bangkok, continues to
become increasingly urbanised. Interest in the land, from local developers,
has also increased following the sale of 15 rai in Q2 2022 that generated net
proceeds of US$4.7 million. The value of Symphony's interest at 30 September
2022 was US$55.8 million based on an independent third party valuation at 30
June 2022. This compares with US$59.4 million at 30 June 2022. The change in
value is predominantly due to a deprecation in the Thai baht by 7.2% and other
minor movements in the assets and liabilities of Minuet.

 

Symphony's original investment in Minuet was $78.3 million. Total distribution
receipts have amounted to US$65.2 million that relate to partial sales of land
by Minuet. 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"): SIHL acquired approximately 50% of the
outstanding shares of SG Land in a JV with Thai Factory Development ("TFD").
SG Land owns the leasehold rights to SG Tower and Millenia Tower, which are
office buildings in central Bangkok, Thailand. SG Land continues to generate
stable performance from rental income. Occupancy remains high at SG Land's two
office towers and rental rates have remained stable due to a shortage of
office space in prime central Bangkok locations.

 

Company Update: Symphony continues to receive an attractive yield from SG
Land. Year-to-date. Symphony received net interest and dividend payments of
US$1.2 million. We expect to continue to receive attractive returns for the
remaining duration of approximately 1.0 and 3.0 years for each of the tower
leases, respectively. By the end of the lease terms, Symphony will have
realised 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, 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 the Hanwha Group. 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.

 

Company Update: Japan lifted most restrictions for inbound travellers
effective from 11 October 2022, which has since led to a strong influx of
visitors. As a result, bookings in Niseko for the upcoming winter season have
also been strong.  During Q3 2022, Symphony invested US$160,000 or its
pro-rata share in the joint development with Hanwha to cover part of the
higher-than-expected soft costs for the development.

 

Desaru Property Joint Venture in Malaysia: The Company has a 49% interest in
a property joint venture in Malaysia with an affiliate of Destination Resorts
and Hotels Sdn Bhd, a hotel and destination resort investment subsidiary of
Khazanah Nasional Berhad, the investment arm of the Government of Malaysia.
The joint venture has developed a beachfront resort with private villas for
sale on the south-eastern coast of Malaysia and that are branded and managed
by One&Only Resorts ("O&O"). The hotel operations were officially
launched in September 2020.

 

Company Update: The One&Only Desaru Coast Resort has seen a steady growth
in visitors. Despite an off-peak period, September occupancy levels were 49%
and ahead of expectations. Year-to-date total occupancy levels were lower at
47%, primarily due to covid-19 restrictions in place during Q1 and part of Q2
2022  that kept land boarders closed with Singapore. Management expect
visitor numbers to continue to improve with more inbound arrivals. Symphony is
working with management and third party specialists to finalise a sales
strategy for the villa development.

 

Symphony invested an aggregate of US$58.8 million in the joint venture at 30
September 2022. The fair value on the same date was US$25.5 million. This
compares to a fair value of US$28.3 million at 30 June 2022. The change in
value is due to a 5.2% depreciation in the Malaysian ringgit and a higher
weighted average cost of capital used to discount expected future cashflows of
the project to arrive at a fair valuation.

 

HEALTHCARE

 

ASG Hospital Private Limited ("ASG"): is a full-service eye- healthcare
provider with operations in India, Africa, and Nepal. ASG was founded in
Rajasthan, India in 2005. ASG's operations have since grown to 49 clinics,
which offer a full range of eye-healthcare services, including outpatient
consultation and a full suite of inpatient procedures. ASG also operates an
optical and pharmacy business, which is located within clinics. Symphony
invested in ASG in tranches from October 2019 through to July 2020 and
subsequently acquired secondary shares in October 2021.

 

Company Update: Organic growth and recent acquisitions continued to drive
performance. Revenue and EBITDA for the quarter ended September 2022 was 49.7%
and 48.9% higher than the same period a year earlier. Total patient numbers
grew by 48.5% during the same comparative period and average revenue per
inpatient grew by 9.2% in September, year-over-year. Three new greenfield
clinics were opened in Q3 2022 with the same number expected to be opened in
Q4 2022.

 

In August 2022, Symphony completed the sale of approximately 35% of its
shareholding in ASG that generated net proceeds of approximately US$17.0
million or 82.3% of total cost. The sale was part of a larger capital raise
that also provided primary capital to ASG to facilitate further acquisitions
and fund growth. The deal creates significant strategic and operational value
to ASG.

 

Following the secondary sale, Symphony's net investment cost in ASG was US$3.7
million at 30 September 2022. The fair value of Symphony's investment on the
same date was US$25.7 million. The decline from US$48.8 million at 30 June
2022, is due to proceeds received from the share sale, a depreciation in the
India rupee by 3% and a change in valuation methodology from comparable
multiples to an option pricing model.

 

Soothe Healthcare Pvt. Ltd. ("Soothe"): was founded in 2012 and operates
within the fast-growing consumer healthcare products market segment in India.
Soothe's core product portfolio includes feminine hygiene and diaper products.
Symphony completed an initial investment in Soothe in August 2019 and
subsequently made investments through convertible notes and securities in
2020, 2021 and 2022.

 

Company Update: Sales in the month and for the quarter ending 30 September
2022 increased by 10.5% and 23.1% compared the same respective periods a year
earlier. Overall, sales growth has slowed as the company increases focus on
improving margins. Aside from gross margins expanding during the quarter
despite inflationary pressures, Soothe continues to meaningfully reduce
promotion costs and increase manufacturing efficiency.

 

In October, the US Development Finance Corporation (DFC) agreed to provide
US$7.7 million loan guaranty to Soothe as part of initiatives to address
challenges faced by emerging markets around the world. The loan guaranty is
reflective of Soothe's positive social impact, strong management team and
governance.

 

Symphony's gross and net investment cost in Soothe was US$12.8 million at 30
September 2020. The fair value of Symphony's investment on the same date was
US$25.9 million, which compares to US$30.5 million at 30 June 2022. The change
in value is due to the use of comparable market multiples (versus the last
transacted price) to derive the value input for an option pricing model used
to value this business.

 

LIFESTYLE

 

Liaigre Group ("Liaigre"): was founded in 1985 in Paris and is a brand
synonymous with discreet luxury, and has become one of the most sought-after
luxury furniture brands, renowned for its minimalistic design style. Liaigre
has a strong intellectual property portfolio and provides a range of bespoke
furniture, lighting, fabric & leather, and accessories. In addition to
operating a network of 27 showrooms in 12 countries across Europe, the US and
Asia, Liaigre undertakes exclusive interior architecture projects for select
yachts, hotels, and restaurants and private residences.

 

Company Update: Liaigre year-to-date orders remained largely flat
year-over-year due to weaker than expected performance by European showrooms
and Design Services. However, the interior architecture business continues to
win new projects and scale operations while easing covid-related restrictions
in recent months has resulted in a pick-up in business in Shanghai.

 

There continues to be delivery delays that have subdued overall sales
year-to-date. Management expect to 'catch-up' on deliveries during the rest of
the year, which is similar to the situation last year. Management has begun to
work with new manufacturing facilities, which is expected to eventually
facilitate higher margins and reduce delivery lead times for Liaigre.

Symphony's gross investment cost in Liaigre was US$79.7 million at 30
September 2022. The net cost on the same date, after deducting partial
realisations, was US$67.6 million. The fair value of Symphony's investment was
US$35.0 million at 30 September 2022. This compares to US$37.0 million at 30
June 2022. The change in value is predominantly due to a depreciation in the
Euro and a lower comparable market multiple used for the valuation of Liaigre,
which were partly offset by a higher trailing 12-month EBITDA.

CHANINTR ("Chanintr"): Chanintr is a luxury lifestyle company, based in
Thailand, which primarily distributes high- end U.S. and European furniture
and household accessory brands, including Liaigre, Barbara Barry, Baker,
Herman Miller, Minotti, Bulthaup kitchens amongst others. Chanintr also
provides FF&E solutions for real estate and hotel projects. In 2019,
Chanintr launched a new program called Chanintr Residences which will showcase
custom-designed luxury residences as turnkey projects.

Company Update: Chanintr's orders year to 30 September 2022 reached THB1
Billion, up 12% compared to the same period a year earlier. The increase in
orders is mainly related to developer projects, which replaced a slowdown in
residential projects that were a key growth driver last year. Revenue during
the same period increased 17% over the prior year, but delivery delays
continue. The company's backlog remains at THB 937 million, the same as last
quarter and last year. Out of this, Chanintr expects to deliver THB 500
million before year-end. The company has piloted the Spruce program, which is
an online rental subscription model for furniture and is expected to soft
launch shortly. The company is also in advanced negotiations with Martha
Stewart to license the brand for South East Asia. Clinton Street Bakery
Singapore has ceased operations since August 2022.

Wine Connection Group ("WCG"): At the end of April 2014, Symphony invested
WCG, Southeast Asia's leading wine themed Food and Beverage chain with
approximately 84 outlets in Singapore and Thailand.

 

Company Update: The operating environment in WCG's core markets improved
during the last quarter as COVID-19 restrictions were lifted in Singapore.
However, there continued to be some challenges including inflation and the
strength of the US dollar that weighed on results. The Thai business continued
to turn around with improved food / wine selection and operating standards.
Year-to-date local currency revenues grew by 85.4% and 16.0% in Thailand and
Singapore, respectively, compared to the same period a year earlier. During
the same period, Thailand outlets had 73.4% same-store-sales growth while
Singapore contacted by 5.7%.

 

EDUCATION

 

WCIB International Co. Ltd. ("WCIB"):  Symphony entered into a joint venture,
WCIB, that developed and operates Wellington College International Bangkok,
the fifth international addition to the Wellington College family of schools
from the UK. WCIB operates a co-educational school that began operations in
August 2018 and will ultimately cater to over 1,500 students aged 2-18 years
of age when all phases are fully complete.

 

Company Update: WCIB reported that admissions had recovered for the FY2022/23
academic year as disruptions related to covid-19 restrictions have subsided.
Overall admissions were ahead of expectations and 40% higher than enrolments
at the start of the prior academic year. Management are optimistic over
incremental enrolments through the summer term, which should allow the school
to deliver a net operating profit, for the first time, at the end of this
academic year.

 

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.

 

Company Update: CTS reported that the business with Abu Dhabi Education
Counsel ("ADEK") and other divisions continue to grow. Management expect that
overall sales for the current financial year will be 20-30% higher than the
year prior.

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 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 buybacks by ITL, Symphony's interest was
28.3% at 30 September 2022.

 

Company Update: Following a strong first half, ITL reported a slowdown in
revenue in Q3 2022 compared to the prior quarter due to weaker aviation and
freight sectors. Overall revenue is in line and EBITDA is slightly ahead of
budget and management expectations. Management have indicated that the market
will remain challenging with the expectation that global trade volumes will
drop by around 30% in 2023. In the current environment, ITL is focused on
increasing operational productivity and strategically expanding certain
divisions inorganically. Enhancing technology and also growing ITL's cold
chain platform remain key management objectives.  A minority shareholder in
ITL, Franklin Templeton, completed the sale of its interest in Q3 2022 to
Mitsubishi Logistics Corporation ("MLC").

 

Symphony's gross and net investment cost related to ITL at 30 September 2022
was US$42.6 and US$42.1 million, respectively. The fair value for Symphony's
interest in ITL at 30 September 2022 was US$131.0 million.

NEW ECONOMY

Smarten Spaces Pte. Ltd. ("Smarten"):  In November 2019, Symphony invested in
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.

 

Update: The easing of workplace restrictions and the adoption of the hybrid
workplace model has led to a 4x growth in user activity YTD, currently
standing at more than 200,000 user transactions per month, and decreased
deployment time. The company has seen increasing deal closures signing up
large enterprise clients. The company currently operates in over 30 countries,
with significant traction in the US which represents 45% of new revenue. This
has led to a steady growth of the business with Sep-22 annualised recurring
revenue (ARR) increasing 40% YoY.

 

To continue to stay on this growth trajectory, the company needs to raise
additional capital. This has become much more challenging in the current
fund-raising environment. The issue is further complicated by a difficult
early investor who is trying to force a buyout of his shares, by exercising
his veto rights to block fund-raising efforts by the company. The company is
seeking legal advice on this matter.

 

August Jewellery Pvt. Ltd. ("Melorra"): Founded in January 2015, 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 23 operational experience centres
across India.

Update:  Melorra had a strong third quarter with the Diwali month of October
being especially strong. The company grew sales during the Diwali period by
113% over the prior year against the industry growth of 20%. In October,
Melorra had the highest ever online visitors at 8.4 million, the highest ever
nonpaid visitors at 1.4 million, highest ever app installs in a month at over
0.5 million and the highest ever Monthly Active Users ("MAU's) at 0.8 million.
The company opened its 23rd store in Patna, India; the offline channel has
turned profitable in October registering an EBITDA margin of 6%. The company
recorded its lowest ever marketing performance cost per order indicating how
the brand value is growing.

 

Good Capital Partners and Good Capital Fund I ("Good Capital" or "GCP"): GCP
is majority owned by brothers Rohan and Arjun Malhotra who have been investing
their own capital since 2014 to create a thriving ecosystem of technology
start-ups. Symphony announced its investment in July 2019 with a 10% stake in
GCP and serving as an anchor investor in its first fund, GCF1.

 

Company Update: Good Capital Fund I made no new core fund investments in Q3
2022. However, there were seven Bharat Founders Fund ("BFF") seed investments
in the quarter with small cheque sizes. The Fund has deployed capital across
13 core fund investments and 40 Bharat Founders Fund investments. BFF is an
early stage venture group of successful Indian entrepreneurs globally; if
these founders are committing personal capital to a start-up BFF will invest
US$25K and try and raise additional capital via a syndicate, where the carry
is shared with the introducing founder. Currently, the Fund is in closing
conversations for four new core investments and one follow-on round into a
portfolio company as well as an additional ten BFF investments. At an
aggregate level, the MOIC at 30 September 2022 was approximately 2.34x.

 

Catbus Infolabs Private Limited ("Blowhorn"): In August 2021, Symphony
invested in Blowhorn, a same-day intra-city last-mile logistics provider
headquartered in Bangalore, India. The company provides a fully
technologically integrated logistics platform through an asset-light
transportation and distributed micro-warehousing network in over 70 cities
across India.

 

Company Update: Blowhorn is seeing steady growth of the business with the
September 2022 ARR increasing 12% year-over-year. The company has been
building up the fulfilment and warehousing business which is seeing good
traction with revenue increasing 66% year-over-year and is now represents 26%
of total revenue.  To fund further expansion the company is currently raising
a Series C round. To provide for capital requirements while this fund raising
is ongoing, Symphony provided bridge funding alongside some funding a venture
debt funding in September 2022. Blowhorn has been recognised for its positive
social impact by providing working opportunities to low-income demographics
across India with over 5,500 owner operated vehicles on the platform.

 

Kieraya Furnishing Solutions Private Limited ("HOK"): HOK was founded in
October 2012 in Bangalore, India to initially provide residential furniture
rental services under the Furlenco brand. The business has since expanded to
include Furbicle, a brand selling refurbished & recycled furniture,
UNLMTD, an annual furniture and appliance subscription service and Prava,
which sells high-end retail furniture.

Company Update: HOK saw growth remaining steady in Q3 2022 as inventory and
marketing spend was reduced to conserve cash pending a planned new capital
raising. The new business line of selling furniture under the Prava brand
turned EBITDA positive in October 2022.

 

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 new customers. The Meesho platform has 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 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.

 

Company Update: Meesho has pivoted from its social commerce roots of being a
women-focused, reseller-led, and zero-commission model to selling directly to
consumers; however, the company still does not charge commissions and is
focused on monetization of advertising from sellers on their platform. Meesho
today earns over 70% of its revenues from selling wares to consumers directly.
It boasts over 122 million active users, including 35 million who transact
monthly. Vidit Aatrey, the Founder & CEO, told a news channel that they
have changed their goals from growth to profitability with the target to be
EBITDA positive by the end of 2023. The company continues to use third party
logistics providers ("3PL") unlike Flipkart and Amazon who have it in-house,
as Meehso believe their customers are more focused on cost than on delivery
experience.

 

SolarSquare Energy Private Limited ("Solar Square"): SolarSquare was founded
in 2015 and is a rooftop solar power services 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.

Company Update: SolarSquare had a weak quarter as July and August was the
monsoon season in India, but the company still managed to book orders for 900+
homes or approximately 25% of total residential orders booked-to-date. Digital
marketing and referrals continue to be the two top sales channels for the
company today. SolarSquare currently operates in six states across India. The
Indian government launched a 'National Solar Portal' on 30 July 2022 that will
integrate 63 electricity distribution companies to enable online net metering
and the application of a fixed subsidy rate across the country to be directly
transferred to customer accounts within 30-days of the system commissioning
and inspection. This is expected to drive further demand for residential solar
projects across India.

SUBSEQUENT EVENTS

 

 ·         Subsequent to 30 September 2022, Symphony made shareholder loan to Smarten
           Spaces Pte. Ltd. that amounted to less than 1% of NAV.
 ·         Subsequent to 30 September 2022, Symphony funded a capital call from Good
           Capital Fund I that amounted to 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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