Trinity Capital Regulatory News (TRC)

17 Apr 2007 07:03

Trinity Capital PLC17 April 2007 TRINITY CAPITAL PLC TRADING STATEMENT Trinity Capital PLC ("Trinity") is pleased to report on its trading progress forthe full year ended 31 March 2007. Key Points: •Invested £143 million of funds, representing 60% of net capital •Trinity has committed £70.5 under two platform agreements with IL&FS. To date, we have deployed £41.5(1) million through four deals under the platforms. With residual commitment of £29 million under joint ventures with IL&FS, the total of funds invested and committed is £172 million, representing 72.3% of net capital •Portfolio of strategically significant and high quality investments across a range of real-estate assets and sectors •Robust network of sustainable partnerships yielding a steady deal flow •One of the largest investment teams within India focusing on real estate assets •Strong future deal pipeline with a number of projects in advanced stages of due diligence. Current pipeline of deals in excess of £350 million •On track to be fully invested ahead of the schedule set out at IPO. Portfolio Update Trinity has continued to make substantial progress with its portfolio through aseries of focused and high quality investments in a number of rapidly expandingsectors including hospitality, commercial, residential and infrastructureprojects. Leveraging upon its network of affiliations with key financialinstitutions and infrastructure developers, Trinity has demonstrated its abilityto generate sustainable partnerships (with leading financial institutions anddevelopers such as: IL&FS, Dynamix Balwas, Kapstone and Lokhandwala) in additionto making solid progress with the development of each of its investments. ITNL - Promoted by IL&FS, one of India's largest financial institutions, ITNLwas formed to spearhead IL&FS' initiatives in India's transportation sector.Trinity acquired a 2.5% shareholding for £4.8 million in ITNL in October 2006.Since then, Trinity's investment has been very active through ITNL's involvementin substantial infrastructure projects such as: North Karnataka Expressway,Vadodara -Halol Toll Road, the Delhi Noida Toll Bridge and the West GujaratExpressway. Since our investment, ITNL has signed a memorandum of understandingwith the Public Works Department, Government of Chattisgarh to develop more than1,300 kms of road network at an estimated cost of £166 million. Goldman Sachshas also recently invested in ITNL (Source: Economic Times April 14, 2007). Suchprojects give rise to real estate opportunities as companies developing roadsfrequently get rights to land along such development. Trikona has the right offirst refusal to develop such land parcels and capitalize on real estateopportunities alongside ITNL's road projects. ITNL is also partnering withseveral city administrators to develop urban infrastructure. http://www.itnlindia.com Kapstone - Trinity's £10.75 million co-investment project with KapstoneConstructions to develop one of India's largest integrated developments, theRustomjee Township, in Mumbai has made substantial progress. The projectenvisages development of 7.2 million sq.ft. of saleable area comprising 3.6million sq.ft of residential, 3 million sq.ft of commercial, 600,000 sq.ft. ofretail space and 350,000 sq. ft. of non saleable area in the form of club houseand schools. Significant milestones have been achieved in the development ofthis complex project. Following environmental approval from the statelegislature, construction of the first six buildings in phase I of the projectbegan and is proceeding well. Phase I is expected to be complete by the end of2008 on time and within budget. Off plan sales within the first two buildingshave performed exceptionally well with 110 apartments - representing 50% of theavailable units in the first two towers, being sold at Rs 3,357 per sq.ft, whichis in line with what had been assumed in our modelling of the project. Trinityhas the option to increase its stake in the project from 16% to 21% for aconsideration of £3.6 million subject to specific performance criteria beingmet. http://www.rustomjee.com/ Lokhandwala - The project envisages the development of 1.37 million sq.ft. ofresidential space in Central Mumbai. Of this 693,000 sq ft will be developed asfree low income housing. Work commenced in March 2007 on Trinity's £11.6 millioninvestment in this Mumbai based residential project. The real-estate marketwithin Mumbai remains buoyant partially as a result of a shortage in qualityresidential developments. Similar projects have been well received attractingsales prices 1.5x that of Trinity's original working assumptions of INR 12,000per sq.ft. (Source: Company) http://www.lokhandwalainfrastructure.com/ Uppal IT - Trinity's £28.3 million investment in a £215 million IT Park, GreaterNoida -10.3 million sq.ft of saleable area (including basement). The projectcomprises 1.47 million sq.ft. of residential area, 1.54 million sq.ft. ofcommercial space, 7.3 million sq.ft of IT space and a 300 room hotel in thesuburbs of Delhi and is progressing well. Infrastructure at the project site isin place including sewerage, electricity and metalled sector roads. Planningapplications have been submitted for approval. Significantly, adjacentdevelopments by Wipro and NIIT are close to commencement and recent land salesfor IT development in Noida have been completed at significant premiums toTrinity's purchase price. The table below compares Uppal IT with Unitech'sacquisition of a similar site of 50 acres located in the same Tech Zone. Land Area Market Value TC's Investment (Acre) (GBP mm) (GBP mm)Unitech's Land in Greater Noida 50.00 41.681Uppal IT 76.04 20.532 1 As per AIM listing prospectus 2 Trinity's land acquisition cost Neelkamal - Trinity's £11.34 million investment in a SPV to develop three luxuryhotels along with a operating hotel over the next three years has madesignificant progress. The new hotels will be located in Goa, Mumbai and Punerespectively. Construction has already begun on the site in Goa and work willcommence in Pune within the next quarter. In Mumbai, pre-construction planninghas been completed with the land having been vacated and soil testing analysiscompleted. The Mumbai hotel will be the first large 5 star luxury hotel to bebuilt in South Mumbai - Central Business District in the last 30 years. Designplans for these projects are being finalised, by some of the world's leadingarchitects: FX Fowle in Mumbai; Buro Happold in Pune; and GA Design in Goa. TheHyatt Group will manage and operate the new hotel properties. The projectcompany is also exploring opportunities to double the total number of roomsbeing developed by building new hotels in Mumbai and expanding capacity inexisting projects. http://www.neelkamalrealtors.com/ Fortis Healthcare - Growth plans for Fortis, which is seeking an IPO in April2007, are proceeding well. Trinity's strategic 4.43% stake in Fortis at INR 145per share gives it the opportunity to benefit from real-estate opportunitiesthat arise alongside Fortis's expanding network of hospitals. Since ourinvestment McKinsey Global Partners (Vasco) also bought into Fortis at INR 159.5per share. Since our investment in Fortis, the company has expanded in to Mumbaiby acquiring the Hiranandani Hospital for £3 million. Fortis also launched itsnetwork of health shots branded Fortis Healthworld and will target 1,000 outletsby 2012, at an investment of £95.3 million (Source: The Hindu Business LineApril 5, 2007) Trikona has the right to develop 3 hotels alongside Fortis Hospital sites.Trikona will appoint an established operator to manage the hotels uponcompletion. Fortis recently announced its IPO at a price band of INR 90-110 -lower than Trinity's entry price. We believe that this is a result of marketconditions and is not reflective of company fundamentals. The BSE Sensex fellapproximately 15% between February and March 2007. Trinity's underwritingassumes a 3-5 year investment horizon and a 25% IRR as disclosed in ourPathfinder. Trinity is the only investor in the consortium that has a realestate franchise and the intent on both sides is to leverage our combinedcapabilities to unlock real estate opportunities. Fortis is promoted by theRanbaxy Group and is one of India's largest healthcare companies with 12hospital and plans to acquire and develop a further 30-40 additional hospitalsover the next five years. Medical tourism is one of the fastest growingsub-sectors of the Indian service economy and is forecast to grow from £167.6million (2004) to £1 billion by 2012 (Source: IBEF Report on Healthcare). http://www.fortishealthcare.com/ Pipavav Shipyard - Trinity's £13.1 million investment for a 10.4% stake inPipavav Shipyard, with SKIL infrastructure Limited, to develop India's largestintegrated shipbuilding yard is on schedule and proceeding well. Since Trinityannounced its acquisition in January 2007, Pipavav Shipyard's has further addedto its order book to build 8 Panamax class carriers with the option ofconstruction an additional 4 ships for at a cost of $35 million each. Trikonahas the right to co-develop 150 acres of land adjacent to the shipyard withSKIL. Given the economic activity within Pipavav, government support of newshipyards and the quality and size of commissions the shipyard is attracting,the development of a 150 acre township adjacent to the shipyard will gainfurther prominence and will be targeted towards the needs of a captive marketwho currently suffer from an acute shortage of quality residential andcommercial facilities in the vicinity. Since our investment, New York LifeInternational Fund I has picked up a 5.9% stake in Pipavav Shipyard forconsideration of £7.9 million (Source: Company). http://www.pipavavshipyard.com/ http://www.skilgroup.co.in/ Manjeera - In January 2007, Trinity acquired a 49% shareholding for £9.1m in aproject to develop commercial, retail and residential space in Hyderabad inSouth India. The project envisages the development of 2.7 million sq.ft. ofsaleable area (including basement) comprising of 419,000 sq.ft. of residential,1.27 million sq.ft. of commercial space and 1 million sq.ft of retail space.Manjeera Construction, one of the city's premier construction companies, is thedevelopment partner. Significantly, the project company has secured finance of£11.8 million from the Housing and Urban Development Corporation, Govt. ofIndia. Change of land use for one of the project sites to commercial use hasbeen issued by the local authorities and approvals from civic bodies (airportauthority, police and fire services) are expected by June 2007. The company hasalso received approval to construct boundary walls and commence levelling andexcavation. Completion is therefore on track for June 2009. http://www.manjeera.com/ MK Malls - Announced in March 2007, Trinity's £17 million investment is focusedon developing commercial office space in the Bandra Kulra Complex, a rapidlygrowing finance and business district in Mumbai, which is gaining a reputationto rival Mumbai's traditional central business district. The project envisagesthe development of 848,000 sq.ft. of saleable area (including basement). Anumber of well-known financial institutions have relocated to this area,including ICICI, IL&FS, the National Stock Exchange, Citibank and the ReserveBank of India. Reflecting increased demand, rental values in Bandra KulraComplex are at par with those in Nariman Point, the traditional central businessdistrict of Mumbai. Recently, the British High Commission bought office space inBandra Kulra Complex at INR 35,000 per sq ft (Source:Time of India, March 20,2007). The company anticipates that total cost of construction including landwould be in the range of INR 12,000 - 12,500 per sq.ft. http://www.neelkamalrealtors.com/ On February 9, 2007 Trinity Capital announced a share buyback of 20.7 millionshares representing 8.2% of its issued share capital for a consideration of£18.2 million. The buyback was carried out to realign shareholding structurewith the long term growth objectives of the fund. Trinity's asset manager, Trikona Capital's investment philosophy is based oncommercial viability, social awareness and strong partnerships. By partneringwith prominent real estate and infrastructure developers Trikona has access toproprietary deals in the market. Moreover, by being socially conscious, Trikonais able to add value and create investment opportunities and secure the futureof the fund. Portfolio Summary Investment DetailsCompany Name Developer /Partner Project Type Investment Area / '000 sq.ft. Commitment (GBP mm)* Comments ITNL ILFS Transaction 4.8 Approx 2,500 kms Kapstone Const Keystone Group Residential / Commercial 14.3 7550 Lokhandwala LKCPL Residential 11.9 1366 UPPAL IT P P L Panthera Developers Commercial / Residential 28.3 10324 300 Room Hotel Neelkamal Dynamix Balwas Hospitality ( 5S Hotels) 11.9 856 Hotel Keys 50 Service Apartments 50 Residential Apartments 145,000 sq.ft of retail/spa Fortis Ranbaxy Group Hospitality (Hospital) 13.7 Option to develop 3 hotels alongside Fortis's hospital developments Pipavav Shipyard ltd SKIL Infrastructure - Shipyard 13.1 Option to develop 150 acresManjeera R H PL Manjeera Commercial / Residential 9.5 2698 M K Malls & Dev (Eq) Dynamix Balwas Commercial 11.7 848 M K Malls & Dev (Mez) Dynamix Balwas Commercial 5.8 Sub Total (a) 124.8 Share Buy Back 18.2Sub Total (b) 143.0 Additional commitment with IL&FS 29.0 TOTAL 172.0 22,931 Trinity's Net Fund Size 238.0 The Asset Management Team To manage the current and future investment portfolio, Trinity's asset manager,Trikona Capital, has added significantly to its management team. The team hasgrown from 8 people in August 2006 to 30 as of March 2007 including fivegraduates recruited from the prestigious Indian Institute of Management. Webelieve Trikona has one of the largest investment teams working in India's realestate market. Adding further depth to its team, Trikona has recently appointed Mr K. Srinathto its asset management team. Mr. Srinath was chief urban planner at Delhi MetroRail Corporation and will play a critical role in the planning, development andmanagement of Trikona's real estate assets. Aashish Kalra, Managing Director of Trikona Capital, said: "We are arguably themost active player in the Indian real estate market right now, having closed andfunded 10 deals since our flotation in April 2006. We have visibility on over£350 million in future transactions and are investing for further growth, bybuilding up our asset management team. Our strong investment track recordtogether with our strategic investments and partnerships continue to giveTrinity access to high quality investment opportunities, and we expect to befully invested well ahead of schedule." ENDS Enquiries: Trikona Capital Aashish Kalra +91 11 2620 7257Cardew Group Tim Robertson +44 20 7930 0777 Sofia Rehman Catherine Maitland (London)Gutenberg Communications Harjiv Singh (New York) +1 917 623 7793 Pranav Kumar (Delhi) +91 98100 77898Numis Iain McDonald +44 20 7260 1000 -------------------------- (1) GBP = US$ 1.987 This information is provided by RNS The company news service from the London Stock Exchange