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Adamas Finance Asia LimitedInvestor Presentation
2020
The London listed company focused on providing shareholders with attractive uncorrelated risk adjusted returns from a diversified portfolio of pan-Asian investments
Disclaimer
2
This Document comprises an institutional presentation (the “Presentation”) which has been prepared by and is the sole responsibility of Adamas Finance Asia Limited (the “Company”). The content of this Presentation hasnot been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000, as amended (“FSMA”). Reliance on this Presentation for the purpose of engaging in any investment activitymay expose an individual to a significant risk of losing all of the property or other assets invested. This Presentation does not constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for anysecurities nor shall it or any part of it form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever or constitute an invitation or inducement to engagein investment activity under section 21 of FSMA.
Notwithstanding the above, in the United Kingdom, this Presentation is only being given to persons reasonably believed by the Company to be investment professionals within the meaning of paragraph (5) of Article 19 ofthe FMSA (Financial Promotion) Order 2005 (SI 2005/1529) (“FMSA Order”) or to be high net worth companies or unincorporated associations within the meaning of paragraph (2) of Article 49 of the FMSA Order or to bepersons to whom it may otherwise be lawful to distribute it. If you are not such a person (i) you should not have received this Presentation and (ii) please return this Presentation to the Company's registered office as soon aspossible and take no other action. By accepting this Presentation the recipient represents and warrants that they are a person who falls within the above description of persons entitled to receive this Presentation.
This Presentation and its contents are confidential. It must not be distributed or passed on, directly or indirectly, to any other person or class of persons. This Presentation is being supplied to you solely for your informationand may not be reproduced, further distributed or published in whole or in part by any other person and under no circumstances should persons of any other description rely or act upon the contents of this Presentation.
No representation or warranty, expressed or implied, is made or given by or on behalf of the Company or any of their respective parent or subsidiary undertakings or the subsidiary undertakings of any such parentundertakings or any of the directors, officers or employees of any such person as to the accuracy, completeness or fairness of the information or opinions contained in this Presentation and no responsibility or liability isaccepted by any person for such information or opinions. No person has been authorised to give any information or make any representations other than those contained in this Presentation and, if given and/or made, suchinformation or representations must not be relied upon as having been so authorised. The contents of this Presentation are not to be construed as legal, financial or tax advice.
The Company has not been, and will not be, registered under the United States Investment Company Act of 1940, as amended, and investors will not be entitled to the benefits of that Act. Neither this Presentation nor anycopy of it may be taken or transmitted into the United States of America or its territories or possessions (the “United States”), or distributed, directly or indirectly, in the United States, or to any U.S Person as defined inRegulation S under the United States Of America Securities Act 1933, as amended, including U.S resident corporations or other entities organised under the laws of the United States or any state thereof or non-U.S branchesor agencies of such corporations or entities. Neither this Presentation nor any copy of it may be taken or transmitted into or distributed in Canada, Australia, Japan, South Africa or the Republic of Ireland, or any otherjurisdiction which prohibits the same except in compliance with applicable securities laws. Any failure to comply with this restriction may constitute a violation of United States or other nationalsecurities law.
Information contained in this Presentation may include 'forward-looking statements'. All statements other than statements of historical facts included herein, including, without limitation, those regarding the Company'sfinancial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company's business) are forward-looking statements. Suchforward-looking statements are based on a number of assumptions regarding the Company's present and future business strategies and the environment in which the Company expects to operate in future. Actual resultsmay vary materially from the results anticipated by these forward-looking statements as a result of a variety of factors. These forward-looking statements speak only as to the date of this Presentation and cannot be reliedupon as a guide to future performance. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this Presentation to reflect anychanges in its expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.
Contents & Presentation Team
3
Contents
Page 4 – Company Overview
Page 5 – Compelling Investment Case
Page 6 - 8 – Recent Updates
Page 9 – Key Performance Metrics
Page 10 – The COVID-19 Pandemic Effect
Page 11 – Differentiation and Added Value Across Three Key Areas
Page 12 – Investment Manager Expertise: Harmony Capital
Page 13 – Significant Market Opportunity
Page 14 – Asian SME Demand for Growth Financing
Page 15 – Sourcing: ADAM’s established advantage
Page 16 – Our Investment Process
Page 17 – Our Growth Sector Focus
Page 18 – Our Strategy
Page 19 – Structured Protection
Page 20 – Our Office and Portfolio Footprint
Page 21 - 23 – Our Portfolio - Selected Investments
Page 24 – Investment Pipeline
Page 25 – ADAM: Competitive Advantages & Outlook
Page 26 – Appendix
Page 27 – Key Terms
Page 28 – Financials
Page 29 – Our Portfolio
Page 30 – The Board
John CroftExecutive ChairmanAdamas Finance Asia
• Experienced director of AIM-quoted companies via executive andnon-executive capacities
• Sector track record working with a number of fast growthcompanies in technology and financial services
Suresh WithanaManaging Partner Harmony Capital Investors
• Founder and lead at investment manager• 25 years’ experience in investing and investment banking• The past 17 years of which focused on Pan-Asian investments• Inhouse experience with Bank of America, Merrill Lynch, Mizuho
International Plc and Tikehau Capital
Presentation Team
Company Overview
4
Attractive Income & Capital Growth
Dedicated to delivering attractive income and capital growth for shareholders
Rigorous due diligence and disciplined risk management, with downside protection through selectively investing inassets and proactively managing them
Provide growth capital and financing to emerging and established Small and Medium Enterprises (SMEs) throughoutAsia, well diversified by national geographies, instruments and asset classes
Robust Risk Management
Strategy
Sourcing private opportunities with a strong pipeline of income generation, focusing on growth sectors across Asia,including healthcare, fintech, hospitality, IT and property
Growth Sector Focus
Track RecordHarmony Capital, the investment manager, has an established tracked record of generating excess returns throughoutmarket cycles across the globe for the past 20+ years, with a focus on Asian special situations for 17+ years
Who We AreLondon listed company focused on providing shareholders with attractive uncorrelated long term risk adjusted returnsfrom a diversified portfolio of pan-Asian investments
The four experienced and independent directors comprising the Company’s Board provide strong governanceGovernance
Compelling Investment Case
5
Supportive Majority Shareholder 55% majority shareholder, supportive long-term holder since 2014 and has not sold any shares
Future Metal Holdings (42.6% of ADAM’s last reported NAV), a Chinese dolomite quarry, has commenced production.1 InDecember 2019, the quarry produced 10-20.0k tonnes of dolomite and wall rock and sold these materials during the initialtrial run of the plant. The asset is valued at US$44.7m (at 31 December 2019)
The Company’s share price is currently trading at a + 70% discount to NAV
Largest Investment
Discount to NAV
Over 250 million Asian SMEs with limited access to traditional bank financing, US$2.7 trillion funding gap (IFC), leading to significant opportunities to deploy capital selectively in this vital segment of the economy
Market Opportunity
Established Investment Expertise and Networks
The Company's investment manager, Harmony Capital, seeks to capitalise on its team’s established investment expertise andbroad networks and offices across Asia, with rigorous diligence and disciplined risk management
Investment PolicyThe London listed company focused on providing shareholders with attractive uncorrelated risk adjusted returns over theshort and longer term from a diversified portfolio of pan-Asian investments
Harmony Capital: established track record of successfully executing and exiting investments throughout market cycles;continuing to create strong pipeline of attractive income generating assets with capital growth potential for shareholders
Established Advantage
1 31 December 2019 NAV
Recent Updates
6
▪ On 21 October 2019, ADAM announced it had successfully raisedgross proceeds of approximately US$1.9million through theissuance of a US Dollar-denominated corporate bond to familyoffices in the Middle East (the "Corporate Bond"), representing thefirst close of a corporate bond issuance programme of up to US$10million.
▪ In May 2020, ADAM successfully secured a second subscription ofUS$1.7million from high net worth individuals and family offices inthe Middle East. The Company has raised a combined total ofapproximately US$3.6million to date.
▪ This Corporate Bond, which matures in October 2022, has a cashcoupon with an interest rate of 12.5% per annum payable semi-annually and is secured with a fixed and floating charge on thecorporate assets of the Company. The Company reserves the rightto change the terms of any future corporate bond issuance.
End-of-Year Financial Results Corporate Bond Issuance
▪ Since 2018, the Company’s Net Asset Value increased by 8% drivenmostly by a new investment which was acquired in exchange for theissue of the Company’s shares.
▪ Portfolio income increased by over 500% to US$2.2m year-on-yeardue to the continued repositioning of the portfolio, a trend that isexpected to continue in 2020 as new investments are made andwhere ADAM expects to monetise some of its older investments.This leaves the Company closer to a point where it can consider asustainable dividend policy.
▪ Net loss reduced by 21% year-on-year driven largely by a significantincrease in Portfolio income which offset operational costs of thebusiness.
▪ The COVID-19 pandemic continues to create global uncertainty, butthe Company remains relatively well positioned given its resilientand diversified portfolio and strong liquidity position. In addition, allthe Company's investments have business continuity proceduresand protocols in place to effectively mitigate the impact of the viruspandemic.
▪ The Company is also seeing an increasingly attractive and growingpipeline of investment opportunities in emerging and establishedsmall and medium sized enterprises across Asia, which are evenmore starved of capital, a situation that is accelerating due to theimpact of this global pandemic.
Recent Updates
7
Share Buyback
▪ On 23 December 2019, the Company purchased 2,400,000existing Ordinary Shares of no par value in the capital of theCompany at a price of USD 0.21 per Ordinary Share, representingan aggregate purchase price of US$0.5m (the "Share Buyback").ADAM bought these shares on-market using existing cashreserves aiming to avoid the potential continuation of an on-market overhang which it believes was created recently by theseller of this block.
▪ The Company understands that the selling pressure from thisshareholder was driven by non-market considerations and thatthis purchase comprises the entire holdings of this shareholder.
▪ A portion of these shares will be held in treasury by the Company,whilst an allocation of the remaining shares with a syndicate ofthird-party investors was successfully completed on 3 March2020.
▪ On 15 November 2019, Infinity Capital Group became a 15.4%shareholder of the Company via a Share Purchase Agreementcompleted at a consideration share price of US$0.45representing a 20% premium to the 30-day weighted averageprice per share in ADAM.
Infinity Capital Group Shareholding in ADAM
Recent Updates
8
Commencement of Production at Future Metal Holdings Limited
▪ On 27 December 2019, production commenced at ADAM’s core asset, FutureMetal Holdings Limited. With the installation of the quarry's processing line, theprocessing plant’s initial run was successfully conducted, and the first salescontract was entered into with others expected to follow in Q1 2020. Furtherramping up of production commenced in the third week of December 2019.
▪ The operation continued until late January 2020 before the Chinese New Yearwith an estimated total production amount of 15,000 tonnes.
▪ As a result of the restrictions imposed by the local Government in order tocontain the COVID-19 pandemic, in February and early March 2020, theoperations of the quarry were temporarily halted. While this was a legalrequirement, local management had originally planned for limited production inthis period due to traditionally adverse winter weather conditions at thebeginning of the year. In line with wide-ranging industrial activity in China, thequarry resumed operations in mid-March 2020. The local management team isactively pursuing sales orders from domestic construction companies who haveall commenced operations.
76.8
93.6 95.0 93.096.7
100.9
0
20
40
60
80
100
120
Interim 2017 FY2017 Interim 2018 FY2018 Interim 2019 FY2019
Key Performance Metrics
9
▪ 2019 NAV increased to US$100.9m (2018: US$93.0m) as a result of the share swapwith Infinity TNP
▪ 2019 Gross income generated from the portfolio increased by over 500% to US$2.2m(2018: US$0.4K), a trend that is expected to continue in 2020 as new investments aremade and where the Company expects to monetise some of its older investments.This leaves the Company closer to a point where it can consider a sustainabledividend policy
▪ Net loss decreased by 21% to US$2.8m (2018: US$3.5m)
▪ A US$0.5m Share Buyback Programme was implemented to improve the
liquidity of shares
▪ 2019 Cash of US$4.1m (2018: US$8.8m)
▪ 2019 NAV per share of US$0.95 (2018: US$1.13)
Net Asset Value Gross Portfolio Income
FY2016
+31%
0.1
0.4
1.2
2.2
0
1
2
3
Interim 2017 FY2017 Interim 2018 FY2018 Interim 2019 FY2019
US$ MM US$ MM
Harmony Capital Appointed
Harmony Capital Appointed
▪ In 2020, the Board anticipates that income from the portfolio will
continue to increase bringing ADAM nearer to commencing dividend
payments
▪ The Board remains confident in the outlook for the business and ofdelivering value to ADAM’s shareholders over the short and longer term.
▪ The Company is continuing to monitor closely the impact of COVID-19 and
will keep shareholders updated on any material developments that affect
the Group as the situation evolves.
The COVID-19 Pandemic Effect
10
Impact of the COVID-19 Pandemic on Current Operations
▪ The Company’s primary focus remains the health, safety and wellbeing of
our people and stakeholders, whilst working hard to ensure that the
Company’s financial position remains robust over the long-term and the
value of the business and its investment portfolio is protected.
▪ The COVID-19 pandemic continues to create global uncertainty, but the
Company remains relatively well positioned given its resilient and
diversified portfolio of pan-Asian investments and strong liquidity
position. The Board draws further comfort from the establishedinvestment expertise and relationships across Asia of Harmony Capital,
the Company’s Investment Manager.
▪ Whilst the markets in which the Company’s portfolio companies operate
have been affected by the pandemic to varying degrees, many of thesecountries, including China and Hong Kong, are exhibiting early signs of
recovery with the gradual lifting of lock-down measurers.
Risk Management and Opportunities
▪ Asian countries generally have benefited from the experiences gained
from previous pandemics such as Bird Flu and SARS and this resulted in far
quicker changes to behaviours and travel restrictions than was the case in
the West.
▪ All the Company's investments have business continuity procedures and
protocols in place to effectively mitigate the impact of virus pandemic.
Harmony Capital continues to be in constant communication with all of
its portfolio company investments and business partners.
▪ Through Harmony Capital, the Company is also seeing an increasingly
attractive and growing pipeline of investment opportunities in emerging
and established small and medium sized enterprises across Asia, which
are even more starved of capital, a situation that is accelerating due to theimpact of this global pandemic.
Outlook
Differentiation and Added Value Across Three Key Areas
11
Experienced Robust Risk Management Process
Diverse Portfolio and Pipeline of Attractive Investments
▪ Established, value-oriented, income focused pan-Asian SMEinvestor
▪ Senior investment team averages +20 years of relevant experience
▪ Complementary skill sets and deep industry expertise
▪ History of generating excess returns throughout market cycles
▪ Extensive financial structuring experience with significant downsideprotection from investments
▪ Established ability to successfully execute and exit investments
▪ Investment manager has +6 dedicated employees in operations andrisk management
▪ Offices: London, Hong Kong & Singapore, on-the-ground local teams
▪ Supplement traditional risk management with advanced portfolioanalytical tools
▪ Proactive rigorous diligence & disciplined risk managementprocesses
▪ Evaluate risk across both portfolio and individualinvestment/growth capital data
▪ Track growth capital-level performance across life of investment
▪ Portfolio of seven investments across four countries
▪ Proactive and selective sourcing of deals with teams that have thetalent, passion and grit to succeed
▪ Non-sponsored, self-originated and primarily private investments
▪ Investments typically structured with over collateralisation andcredit enhancements to minimise risk of loss
▪ Well-structured and downside-protected investments
Investment Manager Expertise: Harmony Capital
12
The Company’s investment manager is Harmony Capital, anestablished private capital manager with offices in London, HongKong and Singapore that has a history of generating excessreturns throughout market cycles.
Through rigorous diligence and disciplined risk management,Harmony Capital is dedicated to delivering attractive income andcapital growth for shareholders with significant downsideprotection through selectively investing in assets and proactivelymanaging them.
Since being established by Suresh Withana in 2005, HarmonyCapital managed a private pan-Asian focused SME fund forsophisticated investors diversified geographically and includingAsian Institutional Investors, North American Pension Plans andFamily Offices – the fund invested in middle-market companiesin South East Asia, China and Australia.
Today, Harmony Capital manages a pan-Asian focused SME fundfor its client, London-quoted permanent capital vehicle, AdamasFinance Asia. The fund provides growth capital and financing toSMEs, which are underserved by traditional bank financing andmaintains diverse exposure throughout Asian geographies,utilising varied instruments across assorted asset classes.
Years of Pan-Asian Investing Experience17Harmony Capital c.US$100m Asia Portfolio
Harmony Investment Fund I c.US$270m Asia Portfolio10 Yr Life Positive Returns
Mizuho International Plc c.US$450m Global Portfolio3 Yr Life Positive Returns
Years of Professional Experience25Prior to founding Harmony Capital, Mr. Withana worked
for Bank of America, Merrill Lynch, Mizuho International
Plc and Tikehau Capital
Significant Market Opportunity
13
2 MSME Finance Gap – SME Finance Forum (2017)3
Estimated number of small and medium-sized enterprises worldwide in 2010, by region – Statista (2018)4 Trade Finance Gaps, Growth and Jobs Survey – Asian Development Bank (2017)
There is a funding gap of c.US$3 trillion across Asia SMEs2
Traditional institutions restricted for regulatory and structural reasons; SMEs seek growth capital from alternative finance providers
Asian SMEs are attractive investments with built in collateral and downside protection
There are over 270 million Asian SMEs, making up 98% of Asian companies3,4
Pan-Asian SME’s account for 42% of Asia’s GDP and only receive 18.7% of lending via traditional institutions4
Significant opportunities to invest selectively in high growth SMEs in Asia and proactively manage them
Returns
Demand
Market
Growth
Opportunity
Structured Investments
Asian SME Demand for Growth Financing
14
▪ ADAM can invest across the capital structure of SME companies with a strong preference for well-structured and downside-protected investments
▪ As Asian SMEs are increasingly starved of capital, ADAM sees increasing opportunities to negotiate and invest in well structured instruments
Enterprise Value US$5m-500m
Revenue US$5m-500m
Profitability & Cash Flows Positive EBITDA; Manageable CapEx
Limited Financing SourcesRestricted access to public markets and traditional bank debt
Convertible Bonds
High Yielding Secured Loans
Loans + Warrants
Preferred Equity
Expansion Capital
Acquisition Finance & Buyouts
Bridge Finance
Re-Finance
Rescue Finance
Income + Capital Gains
Downside Protection
Return of Capital
Accountability
Governance
ADAM SME Target Features
FOR HOW WHY
Sourcing: ADAM’s Established Advantage
15
▪ As an established firm with investment expertise and broad networksand offices across Asia, Harmony Capital has an extensive and deepnetwork of relationships and a robust pipeline in this growing, butfragmented, industry where proprietary relationships are key togaining access and serve as a powerful filter of opportunities.
▪ Harmony Capital:
• has a disciplined deal origination process that has generated more than 30qualified investment opportunities across Asia over the last 14 years
• screens potential portfolio companies based on various criteria includingmanagement growth strategy, robust financials and market opportunity
• has extensive reach and ability to meet with management teams, attendconferences and diligence opportunities
▪ Through Harmony Capital’s local offices, it can originate proprietarytransactions and negotiate attractive transaction terms directly withcompanies, instead of competing in a wide auction process.
Historical Asian SME Investments
Current Asian SME Investments
Our Investment Process
16
Harmony Capital follows a multi-phase due diligence process once a potential investment is identified
Sector
Special Situations
Proprietary Access & Origination
Sustainable Exclusivity
Negotiation
Invest
Investment Filter Risk Factors
Healthcare & Life Sciences, Consumer & Retail, Industrials
Expansion Capital, Bridge Finance, Re-finance
Strong fit and value-adding opportunities
Asian SMEEstimated Enterprise Values ofUS$5m to US$500m
Cyclical Sectors
Lack of Adequate Security
Shopped Opportunities
Participating via Third Parties
Rushed Timeline
Exclusive Opportunities
Deal structure and exit evaluation
As a result of Harmony Capital’s thoroughness throughout the due diligence process,over 100 SMEs were analysed in 2019, however, only 2 companies achievedinvestment.
Our Growth Sector Focus
17
While ADAM remains sector agonistic, Harmony Capital has identified certain sectors in Asia that continue to be attractive based on experience in those specific sectors and where the team’s knowledge and contacts are deepest
▪ Supply constraints▪ Government focus on Clean Energy
Adamas Finance Asia
Energy and Resources
Consumer & Leisure
Internet & Technology
Education
Food and Agriculture
Property
Healthcare & Life
Sciences
Industrials
▪ Increased protein consumption▪ Reduced supply of arable land
▪ Hard asset backing▪ Assessable income stream
▪ Aging population▪ Medical tourism
▪ Asia is a global manufacturing hub▪ Local consumer drives demand
▪ Internet proliferation continues▪ Fintech disrupting financial sector
▪ Significant share of household spending▪ Increased demand for private education
▪ Growing middle class▪ Demand for luxury goods, services and experiences
Our Strategy
18
Our flexible investment policy enables us to evaluate opportunities across a spectrum of complexity
Asian
SME Sector
Expansion
Capital
Acquisition
Finance &
Buyouts
Bridge
Finance
Re-finance
Rescue
Finance
To rehabilitate good firms in distressed situations
To providere-financing needs
To meet short termliquidity needs
Typically for inorganic growth
Typically for organic growth
Structured Protection
19
Investing across the capital structure of pan-Asian SME companies, with a preference for well-structured and downside-protected investments
As Asian SMEs are increasingly starved of capital, we see increasing opportunities to negotiate and invest in structured instruments
HybridCovenants Provide Ability to Influence
Security & Downside Protection
Income +
Capital Gains
Amortisation & Early Return of Capital
Board/Monitoring Rights
Convertible Bond + Covenants
Loan + Warrants/Royalties
Secured LoanPreferred Equity +
Governance
Structured Instruments
Our Office and Portfolio Footprint
20
Investment Exposure
China
Japan
Singapore
Malaysia
Hong Kong
Indonesia
Office Location
Key
Vietnam
The United Kingdom
Portfolio DiversificationPeriod Ending 31 December 2019
54.7%26.2%
2.1%
9.0%
4.0%3.9%
China
Hong Kong
Singapore
Japan
Receivable
Cash
The Company’s investment portfolio from a valuation perspective has not been materially impacted by the global COVID-19 pandemic and the Board expects this to remain the case in 2020. The markets in which the portfolio companies operate have been affected by the pandemic to varying degrees. However, many of these countries, including China and Hong Kong, are showing early signs of recovery as lock-down measures are being gradually lifted.
Our Portfolio - Selected Investments
21
Infinity Capital GroupA Developer of Premium Residential Projects
2018 ADAM invested in Infinity Capital Group, the developer
of a high-end development project in Niseko, Japan – a world-
class skiing destination.
An attractive transaction:
✓ Ability to benefit from the rising popularity of winter tourism in Niseko, Japan due to its reputation as a
world-class ski destination and its proximity to major Asian cities.
✓ Investment proceeds are secured against significant collateral with a conservative ‘Loan to Value’ ratio.
✓ We believe that the high-end residential developments of Infinity Capital Group will appeal to Asia’s
prospering middle class as their propensity to spend on luxury goods and travel increases.
This investment provides ADAM exposure to the rapidly growing Asian winter tourism market andfurther diversifies its portfolio.
Property
DocDocA Leader in Asian Clinical Informatics & Patient Empowerment
2018 ADAM invested in DocDoc, the leading Pan-Asian virtual
network of physicians, clinics and hospitals assisting patients in
finding the highest quality of medical care at the best prices
This investment enables ADAM to take a significant step into the growing clinical informatics sectorwhich is disrupting the traditional healthcare landscape.
Healthcare & Life Sciences
An attractive transaction:
✓ The company’s Artificial Intelligence (“AI”) powered doctor discovery system enables patients to find
their optimum care provider, screening by criteria such as outcome, experience and cost.
✓ Its network of 23,000 doctors, 685 clinics and 108 hospitals across 8 countries in Asia is believed to be
the largest of its kind.
✓ Contracts have been signed with leading health insurance providers in China and in Singapore to
partner in offering the company’s service to policyholders.
Domicile: Japan
Sector: Lodging and Leisure
Carrying Value: US$2.1m
Governance:
Quarterly and Annual Reporting Monthly Interaction with Management
Investment Type:
Secured Loan + Warrants(Two Tranche Investment)
Portfolio Attribution:
2.0%
Interest Rate:17.5% p.a. payable semi-annually in cash
Security:1st Ranking Asset Pledge
Target Exit:2024, Repayment at Maturity
Domicile: Singapore
Sector: Healthcare
Carrying Value: US$2.2m
Governance:Board SeatQuarterly and Annual Reporting
Investment Type:
Convertible Bond
Portfolio Attribution:
2.1%
Interest Rate: 8.0% PIK
Conversion: Not Publicly Disclosed
Security: Not Publicly Disclosed
Target Exit: IPO, Trade Sale etc.
Our Portfolio - Selected Investments
22
Fook Lam Moon (“FLM”)A 70 Year Veteran and Leader in Hong Kong’s Food and Beverage
Sector
2018 Convertible bond issued to ADAM by a Hong Kong-
based high-end food and beverage business with multiple
Michelin stars.
An attractive transaction:
✓ ADAM secured the Convertible Bond in FLM in exchange for certain assets of its legacy portfolio.
✓ Fook Lam Moon is engaged in the operation of high-end Chinese restaurants and F&B management.
✓ It is long established as the premier brand for fine Cantonese cuisine in Hong Kong with its 70-year
history, renowned both locally and internationally.
✓ This investment is directly in-line with ADAM’s strategy to generate capital gain from exposure to value
accretive businesses and investment instruments across Asia.
Delivering exposure to exciting high growth businesses in Asia while aiming to provide a secureincome yield for ADAM.
Consumer & Retail
Future Metal Holdings LimitedChinese Dolomite Quarry
2014 ADAM is the major shareholder of Future Metal Holdings
Limited, which wholly owns a large open pit dolomite quarry (the
“Quarry”) in Linfen City, Shanxi Province, China
This investment enables ADAM to participate in the long-term growth of a mineral asset producer inone of world’s largest emerging markets.
Energy and Resources
An attractive transaction:
✓ The Quarry is positioned to capture the growth of the magnesium market in China, as dolomite is one
of the key ingredients in magnesium pyrometallurgy and with a wide range of applications.
✓ The Quarry is strategically located with convenient access points to maximise operational efficiency.
✓ It has successfully renewed its Mining Licence in August 2018.
✓ An onsite team including a quarry manager were appointed by Harmony Capital to oversee operations
at the site. In December 2019, the Quarry began production and is forecast to ramp up to full capacity
in 2020.
Domicile: Hong Kong
Sector: Food & Beverage
Carrying Value: US$27.5m
Governance:Quarterly and Annual Reporting
Investment Type:
Convertible Bond
Portfolio Attribution:
26.2%
Interest Rate:3.0% Cash Payable Quarterly and 2.0% PIK
Conversion:Discount Rate Not Publicly Disclosed
Security: Negative Pledge
Target Exit: IPO, Trade Sale etc.
Domicile: China
Sector: Metals & Mining
Carrying Value: US$44.7m
Governance:Quarterly and Annual Reporting
Investment Type:
Equity and Shareholder Loans
Portfolio Attribution:
42.6%
Interest Rate: Not Publicly Disclosed
Security: Not Publicly Disclosed
Target Exit: IPO, Trade Sale etc.
23
Infinity TNP7 units in a high-end condominium hotel
2019 Share swap with Infinity Capital Group. ADAM gained a 40% interest in
Infinity TNP, the structure which holds the units in Tellus Niseko, issuing
16,179,310 shares in ADAM at a 20% premium to the 30-day weighted average
price per share in ADAM as consideration.
Consumer & Retail
Domicile: Japan
Sector: Leisure and Travel
Carrying Value: US$7.3m
Governance:Quarterly and Annual Reporting
Investment Type: Equity
Portfolio Attribution:
7.0%
Dividend Yield: Minimum 6.0%
Target Exit: N/A
Our Portfolio - Selected Investments
An attractive transaction:
✓ Supplements ADAM’s ability to benefit from the rising popularity of winter tourism borne through the Infinity Capital Group
transaction.
✓ The terms of the transaction guarantee a dividend yield of 6.0% and internal analysis projects that the yield will reach +7.0%.
✓ The property, Tellus Niseko, which has been independently valued by Jones Lang LaSalle at US$20.0m.
Strategic utilisation of shares swapped at a premium to market value, resulting in the consolidation of ADAM’s rapidlyincreasing income yield
Investment Pipeline
24
Prospect Sector Geography Use of proceeds Investment Type Interest Rate Target IRR Target Exit Date Exit Strategy
1Multi-Channel
NetworkSecured
Convertible Bond12-16% 30-40% 2025 IPO/Trade Sale
2 Cloud ComputingSecured
Convertible Bond12-16% 20-30% 2024 IPO/Trade Sale
3 P2P FinancingSecured
Convertible Bond12-16% 20-30% 2025
Repayment/ IPO/Trade Sale
4 FintechSecured
Convertible Bond14-18% 25-30% 2025
IPO/Trade Sale
5 E-CommerceSecured
Convertible Bond15-20% 30-40% 2025
IPO/Trade Sale/Refinancing
6 F&BSecured
Convertible Bond12-16% 25-30% 2025
Repayment/ Trade Sale/ Refinancing
Disciplined approach to new investment opportunities in growth sector where Harmony Capital has expertise
Business Expansion across Asia
Business Expansion across Asia
Working Capital
Business Expansion across Asia
Domestic Expansion
Domestic Expansion
South East Asia
South East Asia
India
Hong Kong
Japan
Singapore
ADAM: Competitive Advantages & Outlook
25
Asian Investing Expertise• Offices in London, Hong Kong,
Singapore with on the ground local teams
• Expertise investing in private companies, often unable to access traditional sources of capital
Dedicated Team with Experience• Cycle-tested team with a mixture
of buy-side experience
• Over a decade of executing and manging investments across jurisdictions
Investment Approach• Provides growth capital with a focus on
capital gain and income generation
• Selectively financing both emerging and established businesses across various growth sectors across Asia
Strong Risk Management• Detailed and through due diligence
process undertaken
• Provides proactive management throughout the life of an investment using data analytics and customised risk tools
Deal Sourcing• Proprietary relationships with
companies and sell-side brokers
• Extensive reach and ability to meet with management teams
Single Solution• Able to execute transactions
across the capital structure
• Can provide exposure to European and Asian markets through our offices
Appendix
26
• Key Terms
• Financials
• Our Portfolio
• The Board
Key Terms
27
Company Name:Adamas Finance Asia Limited(ADAM.LN)
Structure: Permanent Capital Vehicle
Market:The London Stock Exchange, Alternative InvestmentMarket
Investment Manager:Harmony Capital Investors Limited, with four-yearterm from May 2017
Total Issued Share Capital 104,912,379
Valuation: Yearly Audited Valuation
Independent Board: Comprises of four experienced directors
Management Fee:
1.75% of NAV Payable Semi-Annually, plus 20% of AnyYear on Year Increase in Audited NAV, subject to HighWater Mark and the Hurdle. Payable in cash andshares.
Advisors:
WH Ireland Limited (Nominated Advisor)Pello Capital Limited (Corporate Broker)Locke Lord (UK) LLP (Legal Advisor)Crowe UK LLP (Auditor)Maitland/AMO (Media and Communications Advisor)
Financials
28
Adamas Finance Asia LimitedConsolidated Statement of Financial Position
31 December 31 December
2019 2018
Audited Audited
US$’000 US$’000
Assets
Unquoted financial assets at fair value through profit or loss 67,172 55,519
Loans and other receivables 33,720 28,902
Cash and cash equivalents 4,071 8,828
Right of use asset 34 -
Total assets 104,997 93,249
Liabilities
Other payables and accruals 2,211 201
Current Liabilities
Loans and borrowings 1,909 -
Total liabilities 4,120 201
Net assets 100,877 93,048
Equity and reserves
Share capital 145,027 134,054
Treasury share reserve (671) -
Share based payment reserve 2,936 2,555
Accumulated losses (46,415) (43,561)
Total equity and reserves attributable to owners of the parent 100,877 93,048
No. of shares 104,912 82,465
NAV per share (US$) 0.95 1.13
12.7
44.7
27.5
7.3
4.1
2.12.2
NAV US$100.9m
Our Portfolio
29
An AIM-quoted company targeting delivery of income and capital gain from a diversified mix of pan-Asian investments in the SME Sector
Infinity Capital Group (“ICG”) – A senior secured loan investment in a real estate developer of luxury residential properties in one of Asia’s premier ski destination – Niseko, Japan.
DocDoc – In March 2018, ADAM invested in DocDoc, a leading pan-Asian virtual network of physicians, clinics and hospitals assisting patients in finding the highest quality of medical care at the best prices.
Future Metal Holdings – ADAM is the majority shareholder of Future Metal Holdings, which wholly owns the largest magnesium dolomite quarry in Shanxi Province, China.
Legacy Investments – ADAM’s Legacy Investments include our Limited Partnership Interest in the Greater China Credit Fund, a loan to Jinhongbang Real Estate Development Co. Ltd, and our investment in Meize Energy Industrial Holdings.
Fook Lam Moon – A convertible bond issued to ADAM by a high-end Hong Kong-based food and beverage business.
Future MetalHoldings
Fook Lam Moon
Legacy Investments
Cash
DocDoc ICG
31 December 2019
Infinity TNP
Infinity TNP – In November 2019, ADAM acquired a 40% holding in Infinity TNP, a wholly owned subsidiary of ICG, containing 7 units in a luxury hotel condominium being built by ICG, Tellus Niseko.
The diagram shows investments and cash only
The Board
30
John CroftExecutive Chairman
Hugh TrenchardNon-executive Director
Stuart CrockerNon-executive Director
Dr. Lee George LamNon-executive Director
John Croft is an experienced director of AIM-quoted companies and has previously worked in executive and non-executivecapacities with a number of fast growth companies in the technology and financial services sectors.
Hugh Trenchard began his career at Kleinwort Benson in 1973 and has more than 40 years' experience in investmentbanking, including 35 years of involvement with Japan and 12 of them as a resident.
Stuart Crocker started his career in banking at Merrill Lynch after leaving the British Army in 1985. He is a FoundingMember of the English Business Council in Dubai where he currently resides.
Dr. Lee George Lam is the Chairman of Hong Kong Cyberport Management Company Limited and the Non-ExecutiveChairman of Macquarie Bank’s Infrastructure and Real Assets business in the Hong Kong and ASEAN region.