Investment Policy

Overview MIL is a public company incorporated in the British Virgin Islands established to identify and invest in businesses operating in or with business exposure to Myanmar. The Directors believe that Myanmar offers tremendous potential for long term profitable investments.

MIL targets businesses operating in sectors that exhibit strong growth potential and thereby can be expected to provide attractive yields, capital gains or both.

The Group’s main activities are based in Myanmar, which is also the main country of operation.

The key personnel involved in implementing our investment policy are Nick Paris (Managing Director) and U Aung Htun (Deputy Chairman). They are supported on the ground by Michael Rudolf (CFO). Further details can be found on the “Management” page.

The Company’s primary objective is to build capital value over the long term by making investments in a balanced portfolio of Myanmar businesses expected to benefit from Myanmar’s re-emergence. In the beginning stages the Company is expected to remain concentrated in only a few Businesses as it seeks out new potential investments. However, in time and subject to available opportunities, the aim would be to diversify the range and number of Businesses.

The Company aims to invest proactively, seeking to add value to the development of each of its Businesses. As such, the Company will usually, where permitted under Myanmar or other applicable law, seek participation in the management process through board representation with a view to helping improve the performance and growth of the Business. The Company may acquire majority or minority stakes in Businesses.

Value may be added through the introduction of suitable human resources to complement the existing team; introductions to potential foreign lenders; introductions to foreign markets; access to foreign technical partners; the implementation of corporate governance structures; and advice on such matters as capital structure.

Where appropriate the Company may seek to bring in strategic investors who are capable of adding operational value to the Investee Company.

Business investments will typically fall into two categories, Core Businesses and Financial Businesses:

Core Businesses

Core Businesses are in businesses which, in the Directors’ opinion:

• are considered essential to the domestic economy in Myanmar;
• are characterised by limited opportunities, creating a medium-term barrier to entry; and/or
• are capable of being built into leading franchises in Myanmar.

For Core Businesses, the Company seeks to assist the Business to enhance its return on equity and, as soon as is prudent, generate dividends. When appropriate, the Business will be encouraged to list on a stock exchange although MIL will generally expect to continue to hold its investment for a further period of time.

It is expected that Core Businesses will be held until long term growth rates have started to moderate. As such there will not be an expectation of a near term disposal unless a compelling opportunity for full or partial divestment arises.

Financial Businesses

Financial Businesses, unlike Core Business, will be made only with a realistic and credible exit plan. As such they are likely to be disposed of within a five to seven year time horizon, though this may be adjusted as appropriate. Exits may be ultimately achieved through listings, in Myanmar or on suitable overseas stock exchanges, trade sales or share swaps.

It is expected that the Company’s Businesses will typically require an investment of between US$5 million and US$25 million, though larger or smaller investments may be considered. Investments that are larger than the Company’s existing resources are expected to be funded through further issues of Ordinary Shares. Additionally, where a potential investment opportunity is larger than the Company’s appetite or does not fall within the Investment Policy, we may seek to generate fee income (for example placement and management fees and carried interests) through inviting co-investment from financial investors.

The Company will comply with any sanctions and restrictions imposed by the EU, the UK, the BVI and Singapore. The Directors will also consider other actions by jurisdictions relevant to the business of the Company relating to investment in and trade with Myanmar. Should there be any addition to or re-imposition of sanctions or restrictions at any time in the future, the Directors will seek to ensure compliance with such regulations. Further details of the risk of possible re-imposition of sanctions and restrictions are set out in the Risk Factors in Part V of our Admission Document.

The Company expects to build a balanced portfolio of Businesses.  However, this will take some time and as a consequence, particularly during the early life of the Company, its portfolio of Businesses will be concentrated.

There is no minimum or maximum number of companies that the Company can invest in at any one time. Similarly, there are no sector limits nor minimum or maximum exposure limits to any one company or joint venture partner.

The Company primarily invests into companies, businesses or assets located in Myanmar. This will include Myanmar businesses that are listed on foreign stock exchanges but also foreign companies that have a material exposure to doing business with or in Myanmar.

The Company may employ all forms of permitted investment mechanisms, utilising instruments and structures that might be suitable to allow participation in Investment Targets in a manner that seeks to minimise risks and maximise rewards. The Company may invest in equity, quasi-equity or debt instruments, which may or may not represent shareholding or management control. Investments are likely to be made through special purpose vehicles established specifically for each Business, or by way of legal joint ventures or nominee or trust structures. In some circumstances the Company may invest via contracts that grant an economic interest in an asset.

Because Myanmar businesses are relatively small compared to their more developed Asian counterparts, the Company’s investments are more likely to be in the form of expansion capital than buyouts and may also be in greenfield businesses.

The Company (or a subsidiary) will issue further Ordinary Shares, debt or hybrid financial instruments to raise capital as and when investment opportunities become available. The Company may also consider issuing Ordinary Shares as consideration for acquiring investments.

The Directors believe that an appropriate amount of appropriately structured debt could enhance overall investment returns from the Company’s portfolio of Businesses.

Any borrowings taken on in support of a Business are expected to be raised at a subsidiary level on a non-recourse basis. Where this is not available, yet debt is expected to enhance the overall return from an investment without giving rise to a disproportionate risk, then the Company may borrow directly or may provide guarantees to its subsidiaries for such borrowings. Borrowings should not exceed 50 per cent. of the prevailing NAV of the Company, though if the NAV were to decline this benchmark might be breached.

The Company or its subsidiaries may also issue hybrid financial instruments and may borrow in any currency that the Directors consider appropriate.

The Company does not expect to borrow to fund its operating expenses.

The Company does not intend to limit itself to any specific sectors however, at this time, there are certain sectors falling within its Investment Policy which, given the large funding requirements typically required, would not be focused upon. These sectors include large infrastructure or real estate development, and exploration and production of natural resources. However, the establishment of sector specific vehicles may be considered in the future, possibly with suitable joint venture partners to participate in such opportunities.

Whilst the Investment Policy is not sector specific, in assessing which sectors the Company may invest in, the following themes are considered:

• Regulatory framework: under present foreign investment regulations there are limitations and prohibitions imposed with regard to foreign investment in certain specified sectors. However these regulations may be subject to change and refinement.
• Ease of upgrading: the Company believes that many areas of the Myanmar economy can benefit from practices and technology that are commonplace in other economies without the need to introduce advanced technology, and where relatively easy-to-implement changes can have a significant positive impact on efficiency and profitability. This could be in manufacturing or in services such as finance, distribution and retailing.
• Scalability: the Company looks at sectors where opportunities for significant scalability exist in both domestic and export markets.
• Barriers to entry: in some sectors, being first to market may help secure key retail locations or licences, giving rise to competitive advantages.
• Leverage: the Company will take into consideration the availability of locally sourced debt where that may be influenced by the nature of the underlying business.

The Board reviews the Investment Policy annually. Subject to this review and in the absence of unforeseen circumstances, the Company intends to continue to adhere to the Investment Policy.

Notwithstanding the above, should the Company wish to make a material change to its Investment Policy, which may be prompted, inter alia, by changes in government policies or economic conditions which alter, reduce or introduce investment opportunities, the Company will seek prior Shareholder consent at a general meeting.

In the event of a breach of the Investment Policy or any restrictions imposed on the Investment Policy, if the Board considers the breach to be material, notification shall be made to a Regulatory Information Service provider.