BRJ Fund exits Project Innovation

ADAMAS FINANCE ASIA LIMITED

BRJ Fund exits Project Innovation

Adamas Finance Asia Limited ("ADAM" or the "Company") is pleased to announce that the BRJ China Credit Fund Limited ("BRJ" or "the Fund"), into which it has invested US$800,000, has achieved a gross internal rate of return (IRR) of 28.19% with its latest exit from a credit-finance investment project, Project Innovation.

BRJ is an investment fund launched by ADAM's investment manager, Hong Kong-based Adamas Asset Management (HK) Limited ("Adamas") to provide capital for operationally sound Chinese SMEs in need of short-term bridging finance not easily available within the PRC, where more than 90% of such companies have difficulty in obtaining bank funding. With Project Innovation, BRJ provided credit funding of US$521,000 to a natural resource trading company that needed to make an advance payment on an oil trading arrangement.

ADAM Chairman John Croft said: "In line with the strategic repositioning of the Company, we are continuing to plan the orderly disposal of the existing asset portfolio to generate cash for investment in high-yield corporate lending in Greater China, where a large number of opportunities such as Project Innovation exist. As the Company works towards that objective, this latest high-yield exit for the BRJ Fund provides another example of the solid capabilities provided by the award-winning Adamas investment teams in Asia."

BRJ's investment into Project Innovation was in line with the strategic approach followed by the Adamas investment team, which places strong emphasis on rigorous due diligence and robust collateral in order to identify borrowers able and willing to meet borrowing commitments.

The collateral backing for the project was a convertible bond issued by a Hong Kong main-board listed company, with an overall loan-to-value ratio of 20.55%. The collateral was further underpinned by a personal guarantee from one of the main shareholders of another Hong Kong main-board listed company (with a current market cap of approximately US$1 billion). The loan tenor was three months but the borrower opted for an early repayment option two months from drawdown.

The full repayment of the Project Innovation loan brings the non-weighted average IRR achieved from project exits by BRJ since ADAM first invested last April to 36.08%, well ahead of targeted annual returns of 24%-30% per annum. Other projects have yielded gross IRRs of 27.26%, 31.83% and 57.04%, respectively, on fully-repaid loans of up to US$4.8 million. The Fund plans to invest US$50 million, with the objective of distributing an annual dividend of 8%, payable semi-annually.

The exit from Project Innovation has increased BRJ's Net Asset Value, and the cash generated is available for future investment.

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