Pacific Alliance Asia Opportunity Fund has been admitted to trading on AIM, the secondary market operated by the London Stock Exchange plc.
It has commenced trading on AIM under the symbol ‘PAX’. The Company raised USD 275,000,000 million in gross proceeds through a placing of 275,000,000 ordinary shares at USD 1.00 per share giving the company a market capitalization of approximately USD 275,000,000 million at admission. Grant Thornton Corporate Finance is the Company’s nominated adviser and LCF Edmond de Rothschild Securities Limited is the Company’s broker.
Pacific Alliance Asia Opportunity Fund Limited is a newly incorporated, closed-end Cayman Islands registered, exempted company incorporated to make and hold investments in undervalued companies and assets mainly in Greater China, as well as in other countries in Asia.
The principal investment objective of the Company is to provide shareholders with capital appreciation and a regular level of income by seeking value, arbitrage and special situations investments in Greater China and other countries in Asia. The Company will invest and hold equity, debt and other interests in both listed and unlisted companies and assets where the Company’s investment manager, Pacific Alliance Investment Management Limited believes that investment can be made at a discount to realizable value.
The Company seeks to achieve returns through identifying assets that can be purchased at discounts to their realizable net asset value and realizing such value through sales of the underlying assets or through other forms of structure exit. Discounts to realizable net asset value may exist as a result of factors commonly seen in China and other emerging markets in Asia which include liquidity constraints, distress, informational asymmetries, imperfect corporate governance and frequent regulatory change.
The Company’s investment strategy is fundamentally opportunistic. The Investment Manager will consistently seek and evaluate opportunities with the characteristics described above and the scale and nature of such opportunities are constantly evolving.
The Company aims to adhere to the following investment policies and restrictions:
- Geographical focus: the Company will only make investments in interests of companies or assets with the majority of their value derived from or located in Asia. It is expected that 70 per cent. of the gross asset value will be invested in Greater China, 20 per cent. of the gross asset value in South East Asia and 10 per cent. of the gross asset value in the rest of Asia. The geographic mix of investments within Asia may vary over time depending on the relative attractiveness of opportunities among countries and regions.
- Type of investment: the Company seeks to acquire interests in companies and assets at a discount to their realizable net asset value. As a general principle, the Company is permitted to engage in all forms of investment as allowed under the laws of each jurisdiction in which it operates, utilizing instruments and structures that may be suitable to allow participation in selected investment opportunities. The Company may invest in equity, quasi-equity or debt instruments, which may or may not represent shareholding or management control. Investments may be made directly or through special purpose vehicles ("SPVs"), which are special purpose vehicles established offshore specifically for each Investee Company, or by way of legal joint ventures or nominee or trust structures. The Company may short sell or use derivative instruments to hedge certain market or currency risks. After admission, all investments must be unanimously approved by the Investment Committee.
- Control of Investee Companies: the Company may acquire majority or minority stakes in Investee Companies. In the event that the Company holds a minority interest, the Investment Manager will seek to secure adequate minority protection rights, including but not limited to board participation, membership of supervisory, audit and oversight committees and specific veto rights over major decisions, through shareholders’ agreements and other security or control mechanisms. Furthermore, if the Company purchases minority stakes, the Investment Manager will ensure that sufficient liquidity mechanisms are in place to allow disposal in the target time-frame as described below.
Pacific Alliance Investment Management Limited, a fund manager and fund management advisory business with an office in Hong Kong, has been appointed to identify and execute investments, and to manage the Company’s assets. Investments are sourced, evaluated, executed, monitored and exited by the Investment Manager.
In connection with the Company’s AIM listing, Horst Geicke, Chairman of the Board of directors of Company, said: "We are very pleased with the launch of our latest fund which continues our strategy of targeting the mis-pricing opportunities and the opportunities to unlock value created by the scale and speed of China’s transformation."