FMI narrows in on stock market listing

Yangon took on a bit of the flair of the American city of Omaha over the weekend.

Omaha is home to Warren Buffett-led Berkshire Hathaway. Its annual shareholders meeting is a closely-watched event, a mainstay on the calendar of international investors where Mr Buffett takes on eight hours of business and investment questions.

The closest such event in Myanmar is the annual general meeting of First Myanmar Investment, held on July 25. Now in its 23rd year, hundreds of people crammed the grand ballroom at the Yangon Sedona Hotel, spilling out into the corridors where three projectors and hundreds more chairs were set up for people who could not squeeze inside.

The people were there to see Serge Pun, and hear about plans for First Myanmar Investment, a public company he chairs. It has juggled much of its portfolio in the last financial year as it prepares to list on the Yangon Stock Exchange.

Mr Pun said in his speech that First Myanmar Investment (FMI) has made the decision to concentrate on three pillars – financial services, real estate and health care, winnowing its non-core businesses ahead of listing on the Yangon Stock Exchange.

In financial services, it has increased its stake in Yoma Bank, while in real estate it owns part of several developments, and in health care, FMI has formed a joint venture with Indonesia’s Lippo Group to create Pun Hlaing Siloam Hospital.

“In sharpening our focus on these three areas we needed to make some divestments to free up capital and reallocate our resources,” he said.

“In each case, the proceeds from our divestments were poured back into our ‘three pillar’ businesses.”

The firm generated total revenues of K33.3 billion (US$26.9 million) last year, which Mr Pun said includes sales of subsidiaries. Profits from operations totalled K13.7 billion.

Revamps are also underway with the goal of listing on the Yangon Stock Exchange.

“This year represented one of the greatest periods of change in FMI’s history,” he said.

The company has been actively working to prepare for listing on the exchange – indeed, Mr Pun said earlier this year that it may be the only company ready to list when the exchange launches.

“Our detailed listing prospectus is nearing completion and we will be ready to submit it for approval when the Stock Exchange begins taking applications,” he said in his speech on July 25.

FMI increased its stake in Yoma Bank from 35.6 percent to 51pc in the last fiscal year. Mr Pun said the financial sector is the backbone of any developing country, adding the bank has strong talent and connections with international organisations such as the International Finance Corporation, and an agreement with Telenor on mobile banking.

In real estate, the company has a stake in Star City and Galaxy Towers, as well as KrisPlaza in Nay Pyi Taw and the ambitious Landmark project centered on the former headquarters of Burma Railways in Yangon.

It also holds a majority stake in the newly formed Pun Hlaing Siloam Hospital joint venture with Indonesia’s Lippo Group. The joint venture aims to expand rapidly, and FMI will invest more than US$450 million into it over the next decade.

Mr Pun announced it is planning to divest a number of businesses. These include some that are inactive, such as Yoma Yarzar and SPA Motorcycle, as well as some that do not fit the company’s current direction.

FMI holds a 40 percent stake in Convenience Prosperity Co, a local firm selling New Holland tractors, which it says is “a solid operation”. “However, as the automotive sector is not part of our ‘three pillar’ model, we have decided to divest from this business, thereby freeing up capital to invest in our focal areas,” said Mr Pun.

Similarly, the firm has divested from YSH Finance, a partner in Myanmar Tower Company, which builds mobile phone towers. The tower firm was put up for sale earlier this year. It had also decided to sell Shine Laundry and FMI Flotilla, a water transport company, as well as an agricultural consultancy called ARDC.

It has also decided to reduce its stake in FMI Air from 50pc to 10pc.

“This decision was made because the airline is still in its nascent stages and is not yet profitable,” said Mr Pun. FMI will have the option to buy back a percentage of FMI Air’s shares in the future as its operations improve

FMI also moved to a consolidated basis of accounting this year, which Mr Pun said gives shareholders a clearer picture of its operations. “Instead of only being able to see dividends [from subsidiaries], shareholders can now see the strength of Yoma Bank and other subsidiaries,” he said. For instance, Yoma Bank’s loans now show up on FMI’s balance sheet with the latter’s new system of accounting.

FMI will use the new system in the years ahead, though the change in accounting systems makes comparison difficult with past financial results.

It also announced a divided of K120 per share.

Serge Pun is also the chair of Yoma Strategic Holdings, a Singapore-listed, Myanmar-focused firm. Yoma Strategic is currently mainly driven by property, though company officials have targeted diversification.

Mr Pun also heads Serge Pun and Associates, which last week came out on top of a transparency ranking of the websites of 100 of the largest Myanmar companies. The survey scored the companies on what they say about corporate governance, business practices, human rights, health safety and the environment.

The Yangon Stock Exchange is tentatively set to launch in late November or early December, after government officials postponed it due to concerns about the launch occuring at the same time as the November 8 election.

Some have questioned whether the market can be ready this year.

Source: Myanmar Times

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