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Yangtze China Investment Ltd
- BY: Andrew Hore |
- POSTED: 01/10/2009 |
Yangtze China Investment Ltd says that it has enough cash to make two more investments and it is in the process of raising more money.
The China-focused investment company floated on Aim in May 2008. Yangtze raised $25.4m gross at $1 a share but management had hoped to raise nearer to $100m. The Chinese investors put in the cash expected but non-Chinese investors did not come up with cash in what was an uncertain time for world stock markets.
At least Yangtze did raise some cash and it has been able to invest in companies at a time when valuations may be more attractive. Consumer-related businesses are the focus.
Chief investment officer Stephen Feng says that Yangtze is considering investments in a 3G handsets manufacturer and a consumer finance business, where rules are starting to be relaxed by the authorities.
China does not have a history of borrowing money to buy goods but the younger, more affluent middle class, which is the main target market for the businesses that Yangtze invests in, are more willing to borrow.
Yangtze has four existing investments. IGO Home Shopping proved a disappointment and the investment has been written off. The business still exists in a slimmed down form. However, this write down has been more than offset by an increase in the value of beauty spa franchisor Aesthetic International, which accounts for around two-third’s of the portfolio’s valuation of $17.7m. Yangtze is looking to float Aesthetic in the near future.
The other two investments are Arigata Holdings Inc, known as Onbest, which develops point of sale technology for cash registers and handheld cash machines, and Creative Picture Development, which has developed display technology that transforms 2D images into 3D images.
Yangtze made a net gain on investments of $3.13m in the period from incorporation to March 2009. The profit was $2.15m – the main costs are the advisory fee paid to Yangtze Ventures and directors fees.
The net asset value is 97c a share. The share price is 48c a share – there is a bid/offer spread of 41c/55c. Yangtze is valued at $12.2m.
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