20 Jan 2017 09:26
Terra Capital Plc
Fund Manager's Update Regarding Q4 2016
Terra Capital Plc. ('TCA' or the 'Fund'), the AIM quoted investment trust focused on investing in value opportunities globally, primarily in frontier markets is pleased to report that it has received the latest report from Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager'), covering its activities in Q4 2016.
The Fund Manager's update covering Q4 2016 is reproduced below.
Terra Partners Asset Management Limfited
Portomaso Tower, 8/5A
Portomaso Avenue
St Julian's STJ 4011 MALTA
Telephone +356 2371 7000
Regulated by the Malta Financial Services Authority, Reg. No. C 56353
Registered Investment Adviser with the US Securities & Exchange Commission
January 20th, 2017
Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager') presents its Fourth Quarter 2016 Update to shareholders regarding the activities of Terra Capital Plc. ('TCA' or the 'Fund'), an AIM quoted investment trust investing globally in value opportunities, primarily in frontier markets. The opinions expressed in this document represent the views of TPAM, the Fund Manager of TCA, at the time of its preparation. This document has been prepared from publicly available information, internally developed data and other sources believed to be reliable, and all reasonable precautions have been taken to ensure its accuracy; however, no representation or warranty about the accuracy of the information contained in, or of any omissions from, this document or any supplementary information made available to any interested party or its advisers is implied, and any liability in respect of such information or omissions is hereby expressly disclaimed.
Note that the information herein is not all of the information TPAM had available, or which it relied upon, when making its initial and continuing investment decisions. TPAM reserves the right to amend the information provided herein, and its opinions, at any time, and undertakes no obligation (express or implied) to provide any recipient with any further information or to correct any inaccuracies or omissions which may subsequently become apparent. Readers are advised that a fund managed by TPAM, and some officers and employees of TPAM currently own positions in TCA. This document is for information purposes only and it is not intended as an offer or solicitation regarding the purchase or sale of any security or investment vehicle.
Investments in Emerging and Frontier markets usually suffer from liquidity problems, and are often affected by governmental interference in the free market, local politics and vagaries in commodity and currency prices; therefore, their prices can be very volatile. This means that it can be difficult to acquire and subsequently sell the shares "noted" in TCA's portfolio. All current and prospective investors should be aware that PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All solicitations or offers regarding TCA are made and transacted on the public market of the AIM Section of the London Stock Exchange and occur by reference to TCA's Offering Memorandum and the document titled "Tender Offer to Purchase Ordinary Shares at the Tender Price and Restructuring and Amendment to the Directors' Incentive Plan and Change of name to Terra Capital PLC and Notice of Extraordinary General Meeting" of the April 30, 2012 (the "Circular") as amended by subsequent resolutions, primarily the one passed at the January 26, 2015 EGM. Documents are accessible on TCA's website www.terracapitalplc.com in the "Investor Centre" tab under the Documents and Announcements section of the file "AIM Rule 26". This website contains important information which may supplement, modify or differ from the information contained herein and no prospective investment decision should be considered before careful reading of documentation found on TCA's website.
By accepting this document, you agree to be bound by the foregoing limitations.
TCA's 4th Quarter 2016 Return & Portfolio
The Fund's NAV increased to $1.016 at December 31, 2016 from $0.997 as of September 30, 2016, a net total return of 1.9% for the quarter. For the calendar year, the Fund's NAV increased 13.9%, which includes the dividend payment in February 2016.
The Fund's investment level (equity, fixed income and hedging) increased from 85.8% at September 30 (including commitment to Terra Argentine Fund, L.P.) to 86.3% at December 31. The Fund has maintained an excess of cash in order to fund the expected take-up of the tender offer that was announced on December 12, 2016.
Specific Areas of Investment
Americas
The allocation to the Americas increased from 23.5% to 25.5% and is the Fund's largest regional allocation. The Fund continued to allocate to its investment strategy in Brazil. The only other portfolio change was a decrease in its position Refineria La Pampilla (Peru).
Europe
The Fund's exposure to Europe decreased from 20.2% to 18.9% and is the second largest regional allocation. The Fund liquidated its position in Hrvatski Telekom (Croatia) and decreased its positions in X5 Retail (Russia) and Silvano Fashion Group (Estonia). The Fund added a new position in Fabryki Mebli Forte (Poland).
Asia
The Fund's exposure to Asia decreased marginally from 16.4% to 16.3%. The Fund liquidated its position in Century Pacific Food (Philippines) and decreased its position in Bank of Georgia (Georgia). The Fund added a new position in Great Wall Motor Company (China) and increased its position in Summit Power (Bangladesh).
Middle East
The Fund's exposure to the Middle East increased on the quarter from 15.7% to 16.2%. The Fund increased its positions in Blom Bank (Lebanon), Abu Dhabi Commercial Bank (UAE), and Solidere (Lebanon) and initiated a new position in Ooredoo (Oman). The Fund liquidated its position in Seef Properties (Bahrain).
Africa
The allocation to Africa decreased slightly from 10.0% to 9.4%. The Fund decreased its positions in UACN (Nigeria), Residences Dar Saada (Morocco) and liquidated its position in Umeme (Uganda). The Fund initiated new positions in Emaar Misr for Development (Egypt) and Co-operative Bank of Kenya (Kenya). There were no other portfolio changes during the period.
Fund Details
The following pages detail the Fund's holdings, changes from the prior quarter, and the total return of each company's shares over the quarter in both U.S. dollars and local currency. The numbers provided are based on TPAM's internal calculations.
Region | Country | Security | Shares | Market Value | % of Fund | Change in Share Holdings | 4Q US$ Total Return | 4Q LC$ Total Return | |
AFRICA | Morocco | Residences Dar Saada | 55,843 | 1,019,485 | 1.47% | Decrease | 4.37% | 8.66% | |
South Africa | Holdsport Ltd. | 230,501 | 989,040 | 1.42% | No Change | 4.76% | 4.75% | ||
Tunisia | One Tech Holding | 248,305 | 916,215 | 1.32% | No Change | 8.56% | 13.33% | ||
Tunisia | Automobile reseau tunisien et services | 246,934 | 837,192 | 1.21% | No Change | -4.70% | -0.51% | ||
Tunisia | Tunisie Leasing | 87,818 | 699,921 | 1.01% | No Change | -4.58% | -0.38% | ||
Burkina Faso | Onatel BF | 29,509 | 563,360 | 0.81% | No Change | -11.50% | -6.25% | ||
South Africa | Onelogix Group Ltd. | 2,128,792 | 519,257 | 0.75% | No Change | 12.02% | 12.04% | ||
Egypt | Emaar Misr for Development | 2,998,000 | 479,734 | 0.69% | New | -36.47% | 29.46% | ||
Kenya | Co-operative Bank of Kenya | 2,974,100 | 383,118 | 0.55% | New | 5.63% | 6.88% | ||
Nigeria | UAC of Nigeria | 1,043,009 | 55,628 | 0.08% | Decrease | -19.18% | -19.18% | ||
Nigeria | Nigerian Breweries PLC | 70,000 | 32,867 | 0.05% | No Change | -0.67% | -0.67% | ||
Uganda | Umeme Ltd. | 0 | 0 | 0.00% | Liquidated | -10.70% | -4.57% | ||
6,495,817 | 9.35% | ||||||||
AMERICAS | Brazil | XXXX | 745,146 | 4,063,598 | 5.85% | Increase | |||
Argentina | Terra Argentine Fund LP | 1,700,000 | 2,671,868 | 3.85% | No Change | ||||
Jamaica | National Commercial Bank Jamaica | 5,431,719 | 2,101,408 | 3.03% | No Change | 21.52% | 22.65% | ||
Argentina | Terra Argentine Fund LP Commitment | 1,700,000 | 2.45% | No Change | |||||
Jamaica | Scotia Group Jamaica | 5,429,031 | 1,543,770 | 2.22% | No Change | 15.60% | 16.67% | ||
Argentina | IRSA Inversiones y represent. SA GDR RCTP | 81,433 | 1,501,625 | 2.16% | No Change | -2.90% | -2.90% | ||
Panama | Copa Holdings SA - Class A | 15,265 | 1,386,520 | 2.00% | No Change | 3.88% | 3.88% | ||
Jamaica | Jamaica Money Market Brokers - Jamaica | 8,500,000 | 953,652 | 1.37% | No Change | 12.19% | 13.23% | ||
Peru | Ferreycorp SAA | 1,827,387 | 920,228 | 1.33% | No Change | 3.62% | 2.42% | ||
Peru | Refineria La Pampilla SA | 12,664,695 | 879,283 | 1.27% | Decrease | -10.37% | -11.41% | ||
17,721,951 | 25.52% | ||||||||
ASIA | Bangladesh | Square Pharma | 692,707 | 2,186,435 | 3.15% | No Change | 3.09% | 3.50% | |
Bangladesh | Summit Power | 2,596,398 | 1,217,267 | 1.75% | Increase | 14.80% | 15.26% | ||
Philippines | RFM Corporation | 11,003,750 | 1,131,434 | 1.63% | No Change | 18.33% | 21.43% | ||
Kazakhstan | Kcell JSC - GDRs | 318,630 | 1,019,616 | 1.47% | No Change | -4.76% | -4.76% | ||
China | Qingling Motors | 3,042,615 | 922,165 | 1.33% | No Change | -0.40% | -0.42% | ||
Philippines | Belle Corp | 12,000,000 | 774,194 | 1.11% | No Change | 4.64% | 7.38% | ||
Australia | Ardent Leisure Group | 372,606 | 629,205 | 0.91% | No Change | -19.76% | -14.80% | ||
Philippines | Travellers International Hot | 9,300,000 | 616,875 | 0.89% | No Change | -2.55% | 0.00% | ||
Philippines | Emperador Inc. | 4,279,000 | 603,891 | 0.87% | No Change | -5.91% | -3.45% | ||
China | Great Wall Motor Company-H | 569,000 | 531,306 | 0.77% | New | -4.08% | -4.11% | ||
Georgia | Bank of Georgia Holdings Plc | 12,480 | 458,987 | 0.66% | Decrease | -2.20% | 2.75% | ||
Korea | Lotte Chilsung beverage Co - Pref | 749 | 441,016 | 0.64% | No Change | -12.47% | -3.92% | ||
Korea | Kumho Petro Chemical Co - PFD | 17,850 | 433,730 | 0.62% | No Change | -3.64% | 5.78% | ||
Korea | Shinyoung Securities LTD | 8,370 | 347,064 | 0.50% | No Change | -7.89% | 1.11% | ||
Philippines | Century Pacific Food Inc. | 0 | 0 | 0.00% | Liquidated | -2.67% | -0.12% | ||
11,313,185 | 16.29% | ||||||||
EUROPE | Hungary | Any Security Printing Co.Plc (AlamiNyomda) | 553,679 | 2,142,325 | 3.08% | No Change | 0.94% | 7.57% | |
Serbia | Galenika-Fitofarmacija DP | 79,115 | 1,839,491 | 2.65% | No Change | -8.69% | -2.79% | ||
Italy | QF Polis | 1,789 | 1,538,202 | 2.21% | No Change | -9.32% | -3.88% | ||
Macedonia | Komercijalna Banka AD Skopje | 28,845 | 1,407,329 | 2.03% | No Change | 8.71% | 16.51% | ||
Ukraine | Kernel Holding SA | 86,323 | 1,317,003 | 1.90% | No Change | -1.01% | 8.00% | ||
Russsia | X5 Retail GDR | 39,416 | 1,279,049 | 1.84% | Decrease | 12.01% | 12.01% | ||
Slovenia | Gorenje Velenje | 175,399 | 1,106,617 | 1.59% | No Change | -28.72% | -24.11% | ||
Montenegro | Crnogorski Telekom a.d. | 222,624 | 660,696 | 0.95% | No Change | -7.07% | -1.07% | ||
Poland | FABRYKI MEBLI FORTE SA | 34,955 | 634,779 | 0.91% | New | -7.12% | 1.33% | ||
Estonia | Silvano Fashion Group AS | 148,299 | 461,967 | 0.67% | Decrease | 32.39% | 41.01% | ||
Italy | QF BNL Portfolio IMM | 845 | 414,848 | 0.60% | No Change | -15.74% | -8.89% | ||
Bulgaria | Speedy AD | 16,818 | 328,928 | 0.47% | No Change | -5.44% | 0.69% | ||
Croatia | Hrvatski Telekom DD | 0 | 0.00% | Liquidated | -3.47% | 3.32% | |||
13,131,234 | 18.91% | ||||||||
MIDDLE EAST | Lebanon | Blom Bank GDS ord B shs | 173,272 | 1,888,665 | 2.72% | Increase | 6.86% | 6.86% | |
Oman | Bank Muscat | 995,671 | 1,220,667 | 1.76% | No Change | 16.82% | 16.83% | ||
U.A.E. | ABU DHABI COMMERCIAL BANK | 593,000 | 1,113,994 | 1.60% | Increase | 6.98% | 6.98% | ||
Lebanon | Solidere- GDRs | 109,849 | 1,098,494 | 1.58% | Increase | 4.93% | 4.93% | ||
U.A.E. | Air Arabia PJSC | 2,947,000 | 1,067,114 | 1.54% | No Change | -2.21% | -2.21% | ||
Qatar | Al Meera Consumer Goods | 21,218 | 1,022,786 | 1.47% | No Change | -14.37% | -14.39% | ||
Oman | Oman Refreshment | 175,000 | 979,545 | 1.41% | No Change | 0.22% | 0.23% | ||
Qatar | Doha Bank QSC | 83,692 | 802,255 | 1.16% | No Change | -6.18% | -6.18% | ||
Bahrain | Gulf Hotel Group b.s.c. | 444,273 | 754,143 | 1.09% | No Change | -0.01% | 0.00% | ||
Qatar | Gulf Warehousing Company | 40,750 | 626,785 | 0.90% | No Change | 1.85% | 1.82% | ||
Oman | Oman Cement | 464,950 | 572,432 | 0.82% | No Change | 5.32% | 5.33% | ||
Oman | OOREDOO | 59,031 | 101,196 | 0.15% | New | -5.72% | -5.71% | ||
Bahrain | SEEF Properties b.s.c. | 0 | 0 | 0.00% | Liquidated | 7.99% | 8.00% | ||
11,248,077 | 16.20% | ||||||||
Total Equity Holdings | 59,910,263 | 86.27% | |||||||
Cash | 9,538,403 | 13.73% | |||||||
Total Fund | 69,448,666 | ||||||||
* These figures were prepared by the Fund Manager based on its internal records and calculations.
Revision of Licence - Terra Partners Asset Management Limited
In December 2016, the Malta Financial Services Authority issued TPAM with a revised Investment Services Licence to act as an Alternative Investment Fund Manager ('AIFM') in terms of Directive 2011/61/EU (the 'Alternative Investment Fund Managers Directive' or 'AIFMD'). Prior to this date, TPAM operated under a de minimis AIFM licence.
RESPECTFULLY SUBMITTED BY:
Terra Partners Asset Management Limited
Portomaso Tower, 8/5A, Portomaso Avenue,
St. Julian's ž STJ 4011 ž MALTA
Regulated by the Malta Financial Services Authority, Reg. No. C 56353
Registered Investment Adviser with the US Securities & Exchange Commission
Contact: Galileo Fund Services Limited (Administrator)
Ian Dungate or Suzanne Jones
+44 1624 692600
Panmure Gordon (Nominated adviser and corporate broker)
Paul Fincham or Jonathan Becher
+44 20 7886 2500
NOTES:
Terra Capital Plc is an AIM quoted investment trust focussed on generating high absolute returns while ensuring volatility is kept to a minimum. The fund predominantly invests in under-researched and under-valued companies. The Fund Manager targets companies that are trading at less than their intrinsic worth and so, aside from any potential growth prospects, provide scope for capital appreciation as a result of a reversion towards underlying value. Investments are also made in companies which are viewed as fair value but offer opportunities for growth at a reasonable price. Due to inherent market inefficiencies, the Fund Manager believes many such 'value' opportunities can be found in Frontier Markets and utilises in-house teams of analysts on the ground in areas of interest to investigate suitable opportunities rather than rely on third party research.