Singapore-listed Yoma Strategic Holdings (YSH) last week announced its plans for a massive expansion of its business interests in Myanmar in a bid to diversify its portfolio and income stream in the frontier market of the Southeast Asian country.
The company, which mainly deals in real estate and property, will bolster its push into Myanmar by branching out into education, coffee, dairy products, cold storage and logistics businesses, with an estimated total investment of $130 million.
The moves are part of the company’s push to build a diversified portfolio in Myanmar, Andrew Rickards, chief executive of YSH, said at a press conference in Singapore.
YSH said these developments are in line with its “long-term vision and planning” as it “leverages on its solid foundation to develop sectors of Myanmar’s economy” with strong potential for future growth.
Yoma tied up with the International Finance Corporation (IFC), the private sector lending arm of the World Bank Group, to secure a debt and equity financing package for its venture into the agriculture and logistics sectors in Myanmar, which is subject to completion of IFC’s appraisal, environmental and social impact assessment.
The company has formed a new investment holding company, Yoma Agricultural & Logistics Holding Pte Ltd (YALH), which is intended to hold the group’s interests in its coffee, dairy products, cold storage and logistics businesses.
IFC will invest up to 20 percent equity in YALH with the remaining 80 percent held by Yoma Strategic Investment Ltd, a wholly-owned subsidiary of YSH.
YSH signed an agreement with UK-based ED&F Man Holdings Ltd (EDFM), an agricultural commodities trader, to plant and produce lowland Robusta coffee within the group’s plantation land at the Maw Tin Estate in Ayeyarwaddy division of Myanmar.
The company and EDFM will respectively hold 85 percent and 15 percent of the coffee business which is expected to require up to $20 million of investment over four years with the aim of planting a total of approximately 3,700 acres of coffee by the end of the fourth year. (Details on this story in Page 7).
YSH signed another deal to form a joint venture with First Myanmar Investment Co Ltd (FMI) and PMM Partners Ltd (PMM) to supply UHT dairy products to the local consumer market in Myanmar. The company will hold 40 percent of the dairy business, with FMI holding 50 percent and PMM holding the remaining 10 percent.
The dairy business is expected to require an investment of up to $46 million over the next five years, part of which will be used to purchase modern world-class UHT processing equipment.
Serge Pun & Associates (Myanmar) Ltd (SPA), the group’s affiliated company, has signed an agreement with the Ministry of Livestock, Fisheries and Rural Development to become a major supplier to the ministry and the government’s school milk programme, supplying UHT milk to Myanmar school children.
The company also signed a deal with Japan’s Kokubu & Co Ltd and FMI to enter the cold storage and logistics business in Myanmar. The cold chain business intends to enable farmers to better store and transport their produce in the vast agriculture industry in Myanmar, YSH said.
The cold chain business will initially build two key distribution centres in Myanmar and distribute agricultural, seafood and processed products via high-specification vehicles with chill and refrigeration capacity between the distribution centres and other principal cities and industrial parks within Myanmar.
Kokubu will hold 50 percent of the cold chain business, YSH will hold 30 percent and FMI will hold the remaining 20 percent. The initial capital investment for the cold chain business is expected to be $12 million.
Yoma also said that its vehicle operating lease and rental business, Yoma Fleet Ltd, which was set up in January, has signed its first three contracts last month, with an aggregate order value of more than $1.5 million placed for trucks, buses and tractors.
The conglomerate also announced plans to develop several educational facilities, including an international school and a local school, in two of its major real estate projects in Myanmar, costing an estimated $52 million.
Establishing premium schools in housing developments will add value to the properties on offer, said Rickards. “From a property development’s point of view, it’s clear what happens to your (property) project when you announce a school nearby,” he said. Yoma executive chairman Serge Pun said the schools will increase the value of Yoma’s real estate by about 20 to 30 percent.
Yoma will partner two British education groups – Dulwich College International and Harrow International Management Services – to establish the schools, which will give the company exposure to an industry that offers significant growth potential after the Myanmar opened up the education sector to more private operators in late 2012.
The private-school market could be worth more than $100 million in 2024, local research firm Thura Swiss’ research shows, as Myanmar currently has only about five international schools. The pent-up demand for world-class education presents a great business opportunity, Pun said.
In another project, Yoma will partner First Myanmar Investment Co (FMI) to jointly develop two adjacent plots at FMI City, Yangon, and build 90 homes and 19,900 sq ft of commercial leasing space. The half a hectare of land is valued at $3.2 million. YSH in January spent up to $11.1 million for a stake in Asia Beverages Co to foray into Myanmar’s fast-growing consumer sector.
The expansion into new sectors marks Yoma’s plans to diversify its source of income, Pun said.
“I hope Yoma, as a conglomerate, would have a balanced income stream. Real estate will always be a pillar and, at this moment, contributes slightly more than 90 percent,” he said. “I’d like to see at least 50 percent of our income stream coming from non-real estate businesses.”
