TIDMMIL
RNS Number : 4878U
Myanmar Investments Intl Ltd
24 October 2017
24 October 2017
Myanmar Investments International Limited
Investment into the Tourism sector
Myanmar Investments International Limited [AIM: MIL] ("MIL" or
the "Company"), the AIM-quoted, Myanmar focused investment company,
today announces that the Company has entered into a joint venture
agreement (the "Joint Venture Agreement") with leading Myanmar
tourism entrepreneurs, U Thet Lwin Toh and Daw Lwin Lwin Kyaw (the
"Myanmar Partners"). The Joint Venture Agreement is the culmination
of the Memorandum of Understanding described in the Strategic and
Trading update on 10 April 2017.
The Joint Venture Agreement will see the establishment of a new
joint venture company, Myanmar Voyages Holding Company Limited
("Myanmar Voyages") by MIL and the Myanmar Partners that will
invest into tourism-related assets in Myanmar.
The tourism sector in Myanmar is experiencing rapid growth with
the number of arrivals having increased at a compound average
growth rate of 24% between 2010 to 2016, with tourist arrivals and
tourist expenditure in 2016 reaching 2.9 million and US$2.2 billion
respectively. This expenditure is forecast to grow to US$4.5
billion by 2027. As such, tourism is of significant importance to
Myanmar as a key export sector bringing in foreign currency as well
as providing employment opportunities across the country.
Under the Joint Venture Agreement, Myanmar Voyages will acquire
60% of the existing travel agency business of Myanmar Voyage
International Tourism Company Limited ("MVI"), which was founded in
1996 by the Myanmar Partners. The Myanmar Partners will continue to
hold the remaining 40% of MVI. MVI focuses on inbound tourism,
serving tourists from markets such as Spain, Scandinavia and Japan,
as well as providing land excursion tour packages for cruise liners
calling at ports in Myanmar. The acquisition of MVI is subject to
regulatory approval and a further announcement on this will be made
in due course.
The intention is for Myanmar Voyages to build on the platform
that MVI provides and establish or acquire additional assets in the
tourism sector including hotels, specialised tourist attractions
and restaurants.
Therefore, in addition to acquiring MVI, it is planned that
Myanmar Voyages will also acquire from the Myanmar Partners a hotel
management agreement to run the Serenity Inle Resort, which
features bungalow villas on Inle Lake itself as well as villas and
rooms on the famous lake shore. With 61 rooms in total, the hotel
is located on the east of Inle Lake, just 30 minutes to the famous
Phaung Daw Oo Pagoda. This acquisition is still under negotiation
and it is expected that definitive contracts for this will be
signed within the next two months.
Additionally, Myanmar Voyages will also acquire a 30% stake in
Culture Attractions Limited ("CAL"), which operates the "Mingalabar
Balloon" in Kandawgyi Park, Yangon. This is a static helium balloon
that provides panoramic views of Yangon for tourists and domestic
visitors. It is a unique feature of the Yangon landscape and not
dissimilar to the "London Eye" in terms of its attraction. There
are plans to launch similar static helium balloons in other major
tourist cities in Myanmar. The Myanmar Partners will continue to
hold a 40% stake in CAL with the remaining 30% owned by an
independent third party. CAL only started operations in May of this
year and has incurred modest start-up losses to date. The
investment in CAL is subject to regulatory approval and a further
announcement on this will be made in due course.
This investment will be MIL's fourth investment in Myanmar. Its
first three joint venture investments were similarly socially
impactful investments:
-- Microfinance - Myanmar Finance International now has close to
50,000 borrowers who have been economically empowered to expand
their businesses (including small shops, trading businesses, and
food stalls) through MFIL's ethical lending practices. 85% of its
borrowers are women. MFIL is a joint venture that includes the
Norwegian Investment Fund for Developing Countries ("Norfund") as a
partner.
-- Telecommunication towers - Apollo Towers has built almost 15%
of the country's telecoms towers, providing access to mobile
telephony and data communications for upwards of 6 million people.
This not only brings education and enrichment to their lives but
also supports the country's productivity and economic
development.
-- Pharmaceutical retail franchise - the Medicare joint venture
stresses the importance of ethical business practices. In
particular, it ensures that all its products are genuine, safe and
comply with prevailing regulations; that they have been shipped and
stored properly; that the correct medicine has been dispensed as
treatment for the relevant ailment; and that the medicine is still
within its "sell-by date".
Aung Htun, MIL's Managing Director said, "We are delighted to
form this joint venture with such knowledgeable partners who have
such well-established track records. Myanmar Voyages provides a
solid foundation for MIL's entry into the tourism sector in
Myanmar. Compared to countries such as Thailand and Cambodia,
tourist arrivals into Myanmar are currently significantly below
their potential, especially given the range of tourist destinations
and attractions which exist. As such, we believe that tourism is a
long-term growth sector and look forward to working with U Thet
Lwin Toh and Daw Lwin Lwin Kyaw to establish Myanmar Voyages as one
of the leading tourism platforms in the country."
U Thet Lwin Toh, MVI's Managing Director, said, "Through this
partnership, we are aiming to help in the development of the
Myanmar tourism sector. Together, we hope to create a platform with
strong financial backing, sound management and advanced technology
to take advantage of the rising and expanding Myanmar tourism
industry."
MVI's unaudited management accounts for the year to 31 March
2017 show an EBITDA of approximately US$340,000 albeit subject to
audit by an international audit firm. The setting up of Myanmar
Voyages will therefore involve stage payments to be made by MIL.
Initially MIL will acquire a 97% interest in Myanmar Voyages for an
outlay of approximately US$800,000. Subsequently, once a balance
sheet for MVI has been established, MIL will make a first payment
for the MVI business based on its audited net asset value.
Thereafter, based on the future EBITDA of the acquired MVI business
for the two years to 31 March 2020, MIL may make two additional
top-up payments though these two payments can also be settled by
allowing the Myanmar Partners to take additional shares in Myanmar
Voyages. Taken together, MIL expects that the aggregate
consideration (the NAV payment and the two EBITDA payments) is not
expected to exceed US$2.3 million. The Company believes the value
of the business being acquired is not materially different from the
consideration.
- Ends -
For further information please contact:
Aung Htun Michael Dean
Managing Director Finance Director
Myanmar Investments International Myanmar Investments International
Ltd Ltd
+95 (0) 1 391 804 +95 (0) 1 391 804
+95 (0) 94 0160 0501 +95 (0) 94 2006 4957
aunghtun@myanmarinvestments.com mikedean@myanmarinvestments.com
Nominated Adviser Broker
Philip Secrett / Jamie Andrew Pinder / David
Barklem/ Herring
Carolyn Sansom Alistair Roberts (Hong
Grant Thornton UK LLP Kong)
+44 (0) 20 7383 5100 Investec Bank plc
+44 (0) 20 7597 4000
Public Relations
Julian Bosdet / Dylan
Mark /
Alejandra Campuzano
Abchurch Communications
+44 (0) 20 7469 4630
Notes to Editors:
Myanmar Investments International Limited (AIM: MIL) was the
first Myanmar-focused investment company to be admitted to trading
on the AIM market of the London Stock Exchange. MIL was established
in 2013 with the intention of building long term shareholder value
by proactively investing in a diversified portfolio of Myanmar
businesses that will benefit from the country's re-emergence and
ongoing economic development. The Company is led by an experienced
and entrepreneurial team who between them have considerable
industrial, corporate and financial management experience.
MIL aims to identify investments with strong growth which if
necessary can be "de-risked" through the introduction of
experienced senior line-management, mentors and / or strategic
partners sourced by MIL's management board. The Company's main
focus is on opportunities that are experiencing acute supply and
demand imbalances, such as within the consumer and
capacity-constrained sectors.
With its strong proprietary investment pipeline of deals, MIL
provides investors with a highly disciplined and conservative
investment process into one of the most promising growth
opportunities of this era.
MIL's largest investment (US$21 million cost for a 9.3%
shareholding) is in Apollo Towers, one of Myanmar's top telecom
towers companies with 1,800 towers. Apollo operates in the high
growth telecom sector with a strong management that is growing the
number of co-locations (i.e. multiple tenancies) on its portfolio
of towers. In June 2016, the US Government's Overseas Private
Investment Corporation ("OPIC") provided a US$250 million debt
facility to Apollo Towers.
MIL's first investment in August 2014 was into Myanmar Finance
International Limited ("MFIL") which today is one of the top 10
microfinance companies in Myanmar. Since MIL invested, MFIL's
business has expanded rapidly; its loan portfolio has a CAGR of
145% since investment. The business is profitable with zero NPLs
and a sustainable expansion plan for long term growth. In November
2015, the Norwegian Government's Norwegian Investment Fund for
Developing Countries ("Norfund"), the Norwegian development finance
institution, also became a 25% shareholder in MFIL.
In May 2017 MIL announced it had established a pharmacy,
healthcare and personal care product franchise joint venture. It is
expected that the business will fill a vacuum in the present retail
landscape and at the same time tap into the rapid growth of the
middle and affluent classes in Myanmar. The two joint venture
partners are: a) an experienced retail group that runs over 55
pharmacy, health and beauty outlets in a neighbouring Asian
country; and b) an industry veteran with significant experience
leading Asian-based retail concepts. The Company has made an
initial investment of US$495,000 for a 45% stake. The Company
expects to invest further capital in the business over the next few
years as it continues to expand.
Myanmar, a country of approximately 51.4 million people and
roughly the size of France, has been isolated for much of the last
50 years. Once it was one of the more prosperous countries in
Southeast Asia as it has an abundance of natural resources (oil,
natural gas, arable land, tourist attractions and a long
coastline), it is now one of the least developed countries in the
world.
The country has undergone an unprecedented and peaceful
transformational reform process, initiated by U Thein Sein's
Administration in 2011. This is now continuing under the elected
civilian administration led by Daw Aung San Suu Kyi which came to
power in April 2016 as a result of the first democratic elections
in 50 years. While the process is still evolving, the new
government has broad support and significant progress has been made
to the economic prospects of the country.
In October 2016, the United States government lifted all
remaining sanctions against Myanmar and re-admitted the country
into its preferred tariff system.
For more information about MIL, please visit
www.myanmarinvestments.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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