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3 Sep 2008 07:00
RNS Number : 5920C
Origo Sino-India PLC
03 September 2008
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3 September 2008
Origo Sino-India PLC
Investment in Primary Holdings International
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Origo Sino-India Plc (“Origo” or the “Company”) (LSE: OSI) is pleased to announce that, further to the announcement of 26 August 2008, it has invested US$4 million for an interest of approximately 10% in Primary Holdings International Trust (“PHI”), a newly formed entity which has been established to acquire and lease Australian farmland properties targeting exports to Asia.
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Origo Resource Partners Limited (“ORP”), the fund to which Origo provides consultancy services, invested a further US$16 million in return for an interest of approximately 39% in PHI, bringing the total amount of funds raised by PHI in this fundraising to US$20 million.
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The investments are being made in the form of convertible preference units in PHI, which carry preferred dividends of 10% per annum, together with warrants to subscribe for further convertible preference units, on the basis of one warrant for every 1.25 convertible preference units. Origo and ORP are entitled to appoint two directors to the board of the company which will control PHI. On closing, the guarantee of up to AU$11 million extended by Origo to Primary Holdings International Group Pty Ltd, as announced on 26 August, lapsed. Origo’s investment will be funded out of its existing cash resources.
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PHI’s strategy is to build a diversified portfolio of farmland properties in Australia from which it can supply a full range of premium soft commodities for export to the growing markets of China and India. PHI intends to acquire under-utilised farmland with secure water rights where its experienced management team sees the opportunity to improve capacity, yield, and capital value through the application of improved management techniques and targeted capital expenditure.
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PHI will lease acquired properties to professional local partners who are responsible for day-to-day management of the farms and incentivised to improve yields via irrigation, management, new technology and economies of scale. PHI will support lessees by providing group-level functions covering management, finance, logistics, marketing and sales. In addition, PHI also expects to be able to generate further returns via the optimisation of infrastructure and water management across its portfolio. This structure should allow PHI to reduce risks related to climatic conditions and global commodity markets, while generating lease fees linked to improving yields of the land. PHI is initially targeting properties in Queensland and the Northern Territory with secure water resources, efficient logistical infrastructure and access to China and India.
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Commenting on today’s announcement Chris Rynning, CEO of Origo, said:
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“This investment provides Origo with indirect exposure to attractive soft commodity markets via PHI’s low risk business model and strong management team. I am confident that our deep understanding of Chinese and Indian markets and access to capital will accelerate PHI’s strategy to develop into a significant exporter of high quality agricultural products to Asian markets”.
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Further information:
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Origo Sino-India PLC
Chris Rynning
chris@origoplc.com
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+86 1390 124 6417
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Nominated Adviser:
Smith & Williamson Corporate Finance Limited
Azhic Basirov
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+44 (0)20 7131 4000
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Broker:
Liberum Capital Limited
Simon Atkinson
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+44 (0)20 3100 2223
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Public Relations :
Aura Financial
Michael Oke/Andy Mills
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+44 (0)20 7321 0000
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Notes to editors:
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Origo Sino-India PLC ("Origo"):
·; Origo is an established private equity investor and strategic consultancy business, which provides its shareholders with exposure to growth opportunities and private equity returns in China and India.
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·; Origo's business model is to generate capital gains from private equity investment in growth companies from which it also generates fees for consultancy services related to further fundraisings, M&A and strategic development.
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·; Origo is aligned with two major financial institutions which provide a source of high quality deal flow. In China, Origo works closely with China Equity, a leading private equity firm, whose chief executive is a member of Origo's board. In India, Origo has entered into a memorandum of understanding with SBI Capital Markets, one of the longest established companies in the Indian Capital Markets. A former chairman of the State Bank of India is also a member of the board of Origo.
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·; Through a placement of new Origo ordinary shares in March 2008, funds managed by GLG Partners LP invested approximately £17 million bringing their total stake in Origo to approximately 29.6% of the Company’s outstanding share capital.
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·; Origo also signed a memorandum of understanding with GLG Partners LP in March 2008 to explore asset management and advisory opportunities in China, India and other markets.
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·; On its admission to AIM in December 2006 Origo raised GBP12.8 million gross of new money via a placing of 25,673,238 Ordinary Shares at 50 pence per share. Each ordinary share carried a warrant exercisable at 55p.
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·; Origo has a significant portfolio of investments in a range of industrial sectors, including mobile applications and content; natural resources; art and paper products; furniture; food and beverage; online gaming; anti-virus software; and bio energy.
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