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(AGOL) ( AGOL ) is a closed ended investment company incorporated and registered in and listed on the. AGOL s investment objective is to deploy capital in a diversified portfolio of global emerging market
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(AGOL) ( AGOL ) is a closed ended investment company incorporated and registered in and listed on the. AGOL s investment objective is to deploy capital in a diversified portfolio of global emerging market strategies which will be actively managed with a view to maximising total returns. This will be achieved by investing across investment themes, including special situations, external debt, local currency, equity and corporate debt with a principal focus on special situations. Performance NAV LSE Bloomberg Share Class Per Share Ticker ISIN Ticker EUR 9.23 AGOE GG00B1YWWB33 AGOE LN GBP 9.41 AGOL GG00B1YWTR89 AGOL LN USD $ 9.52 AGOU GG00B1YWWJ19 AGOU LN NAV, net performance and data is provided for information purposes only and sourced from (). Shares in AGOL do not necessarily trade at a price equal to the prevailing NAV per Share, which may be at a discount or premium. Periods greater than one year are annualised. Please refer to additional source data on the second page of this document. Past performance is not a reliable indicator of future results. Allocation Allocation by Investment Theme Equity External Debt Special Situations Corporate Debt Local Currency Cash & Equiv..Country 1.1% 0.4% 3.0% 0.6% 13.9 % Holding Cayman Islands (AEI) 16.8% Brazil 15.0% India 13.1% Singapore 12.6% Indonesia 6.8% Philippines 4.5% Russia 4.3% China 4.0% Israel 3.7% Thailand 2.9% United Arab Emirates 2.6% Saudi Arabia 2.5% Kazakhstan 1.2% Ukraine 1.1% South Africa 0.7% Other Countries 8.2% 100.0% 80.9% -15% 5% 25% 45% 65% 85% Investment Theme s.industry Electric Energy-Alternate Sources Telecommunications Media Real Estate Oil & Gas Services Oil & Gas Diversified Financial Services Banks Environmental Control Advertising Retail Healthcare-Services Mining Iron/Steel Other Industries Inception Share Class 1 Month 3 Month YTD 1 Year EUR -1.07% 0.76% 10.45% 10.06% -2.06% GBP -0.95% 0.86% 10.22% 9.84% -1.44% USD -0.94% 1.17% 10.92% 10.54% -1.04% Details Equity Focuses primarily on liquidity and top-down macro country selection in publicly traded equities and may be complemented by a portion of equity special situations. External Debt A highly diversified portfolio of emerging market debt assets with a primary focus on dollar denominated debt. Special Situations Bottom-up, value and event-driven strategy. Investments are mainly in corporate restructurings through distressed debt, private and public equity and equity linked securities. Corporate Debt Corporate debt investment theme focusing on the developing corporate debt asset class in emerging markets. Local Currency Takes advantage of the rapidly expanding local currency and local currency denominated debt market with low correlations to other asset classes. Allocation is shown the by the investment themes of the underlying funds or companies which AGOL is invested in. Allocation by Country Allocation by Industry Holding 18.3% 14.8% 11.2% 9.7% 9.2% 8.3% 6.5% 5.8% 2.7% 2.1% 1.5% 1.1% 1.1% 0.7% 0.4% 6.8% 100.0% Emerging Markets carry risks as well as rewards. The disclosures including the risk warning on the last page must be read in conjunction with the AGOL Prospectus before investing. Assets MM: US$ () Management Allocation by Investment. Special Situations Fund 4 Holding Monthly Investment Performance 33.2% -1.79% emerging markets special situations investment fund with a 7 year fixed life and limited partnership structure. Asian Recovery Fund 21.7% +0.94% Asian special situations with investments mainly in corporate restructurings through distressed debt, private & public equity. AEI 11.7% 0.00% Special Situations Fund 5 SICAV Emerging Markets Corporate Debt Fund 10.2% -2.46% 9.1% -1.02% ETH Bioenergia 8.2% 0.00% AEI is one of the world s largest energy companies focused on emerging markets. The core business segments are Natural Gas Transportation, Services and Distribution, and Power Distribution and Generation. emerging markets special situations investment fund with a 7 year fixed life and limited partnership structure. AGOL s total commitment to this fund is $50 million. Daily dealing UCITS III fund with global exposure to Emerging Markets principally by investing in corporate debt Brazilian renewable energy equipment co. for production of ethanol & electricity from sugar cane. Asian Special Fund Multi-Commodity Exchange of India (MCX) Greater China Fund - Equity 3.1% % 1.8% +0.54% 1.1% -6.83% A 5 year fixed life fund focussing on bottom-up, event-driven Asian special situation opportunities which are accessed by purchasing shares of the Asian Recovery Fund at a discount to its prevailing NAV. India s largest commodity exchange which offers futures trading in more than 40 commodities from various market segments including bullion, energy, spices, plastic and fibre. Focuses primarily on domestic Class A Chinese equities making use of Qualified Institutional Investor (QFII) status awarded by the Chinese securities regulator. Cash & equivalents 0.6% Cash & equivalents includes unencumbered bank balances and investments in marketable liquid instruments, encumbered cash backing derivatives and margin balances. () Management f Top 10 Underlying Investments Investment Holding Country Link AEI ETH Bioenergia 16.8% Cayman 14.4% Brazil Owns and operates essential energy infrastructure businesses in emerging markets Renewable energy equipment co. for production of ethanol & electricity from sugar cane Digicable 5.8% India One of the largest Cable TV service providers in India Jasper Investments 4.6% Singapore Pacnet Int l Ltd. 4.6% Singapore Listed company investing in Asian growth enterprises, but primarily oil services Asia s leading independent telecommunications infrastructure and service provider ECI Telecom 3.7% Israel ECI Telecom is a leading supplier of broadband networking infrastructure equipment Rubicon Offshore 3.3% Singapore Multi Commodity Exchange of India (MCX) 3.0% India Offshore oilfield services company specialising in floating production vessels Nationwide electronic commodity futures exchange trading in over 40 commodities Alphaland 3.0% Philippines Real estate development company focussing on underdeveloped sites Bangkok Land 2.8% Thailand Total: 62.1% Listed property developer and convention centre operator in Metro Bangkok Quarterly Update of Top 5 Underlying Investments Holding 16.8% AEI Utilities AEI is headquartered in Houston, Texas, and owns and operates over 50 companies in Argentina, Bolivia, Brazil, Chile, China, Colombia, Ecuador, El Salvador, Dominican Republic, Guatemala, Jamaica, Mexico, Nicaragua, Panama, Pakistan, Peru, Philippines, Poland, Turkey and Venezuela. The company operates through four core business segments: Natural Gas Transportation and Services, Natural Gas Distribution, Power Distribution and Power Generation. AEI is a company that manages, operates and owns interests in essential energy infrastructure assets in the emerging world. It is a unique global platform: others in the power space have regional businesses or are global single line e.g. generation, but none are global multi-line businesses. Over time expects AEI to grow in Eastern Europe and Asia so that its portfolio better reflects the relative economic weights of different regions. believes value, diversification and scale in energy are available in emerging markets, which are stable, long-term growing markets and that this will increasingly be valued by others. Elektro, AEI s largest subsidiary, along with other Brazilian electric distribution companies are undertaking a regulatory review with ANEEL, the Brazilian regulator. Proposed changes may have an impact on the sector in Brazil and Elektro and other distribution companies are working together to review the possible changes in regulation. A draft regulatory scheme in Colombia is generally favourable to Promigas. AEI is also advancing in negotiation with Petrobras of a possible leasing agreement of Cuiaba, which if completed would allow Cuiaba to make a small margin for the next two years or until it can contract directly with the market. continues to work towards a realisation and exit of AEI either through a trade sale or public listing. () Management Quarterly Update of Top 5 Underlying Investments ETH Bioenergia Holding 14.4% Energy - Alternate Sources ETH Bioenergia, formerly Brenco - Companhia Brasileira de Energia Renovável, is a fully integrated, renewable fuels company which has initiated construction of one of Brazil s largest ethanol production platforms involving the planning, development and harvesting of sugarcane and the large scale industrial production and distribution of ethanol fuel. The investment rationale is the favourable ethanol production environment in Brazil, with an experienced labour force; a large amount of inexpensive, fertile and arable land; an ideal climate; and proven technology. The Brenco unit is one of the lowest-cost producers of ethanol in the world with significant scale it could be achievable to become a reliable exporter in the Brazilian market. Following the merger of Brenco and ETH in April, the Company has been focused on integration of the two companies, as well as on ongoing execution of ETH's and Brenco's production ramp-up. Management has identified R$30 million in annual cost synergies that have been achieved. All of ETH's plants continue to operate within plan and have benefitted from the strong recovery in domestic ethanol prices. The first Brenco mill commenced operations in Q and the second is ready to commence operations in Q Two more of Brenco's greenfield mills are slated to begin operations in Q In addition, management has begun optimisations on the co-generation side of the business, having started to participate more actively in the state-run electricity auctions, and having negotiated with ANEEL (Brazil's electricity regulator) to allow for the substitution of ETH plants for Brenco plants as suppliers in forward electricity sales, achieving further synergies. Holding 5.8% Digicable Cable TV Service provider Digicable was started in mid 2007 as a cable TV start up to take advantage of a very fragmented Indian cable TV market and with low digital penetration of less than 10%. Today, Digicable is one of the largest Indian Cable distribution companies with over 2,000 employees and a strong emphasis on quality of service and content. This has enabled Digicable to cater to millions of subscribers who are spread across 125 locations in 46 cities and 14 states across India in a very short span of time. With a fiber optic backbone across its networks and state-of-the-art distribution set ups, Digicable brings the digital age through Cable transforming the way viewers receive information and entertainment. Over time, as digitalisation increases, Digicable is expected to get an increasing share of the subscription revenues, now mostly kept by the local cable operators in an analogue world. With the deployment of next generation digital set top boxes, they will have the ability to create a large and stable value added services income stream, which will also solidify its subscriber base (video on demand, internet on TV, advertisements, etc.). Digicable has announced its merger with Reliance Communications' (Part of the Reliance-AnilAmbani Group) Direct-To-Home (DTH) and retail broadband businesses, creating Reliance Digicom, a leading player in the Indian entertainment space with more than 10 million subscribers, becoming India s largest and the world s 5th largest pay TV operator in terms of number of subscribers. On closing, expected by December which is subject only to regulatory processes and approvals, funds/accounts are expected to have a stake of around a third in Reliance Digicom with minority control and protection rights. Holding 4.6% Energy Jasper Jasper is a Singapore listed investment company which has acquired a controlling stake in Neptune Marine (www.neptune-marine.net), an Oslo-based drillship company with operations in Asia. Neptune has 2 vessels, one of which is contracted to PDVSA in Venezuela. Neptune Marine was in financial difficulties arising from leverage at the holding company level and also disputes between its shareholders. Jasper, together with funds and accounts, has invested to resolve issues at the shareholder level and re-capitalise the business. In the current market for oil field services, the main objective is survival and then consolidation. Value is generated through high quality execution and being positioned in the most robust segments of drilling activity. () Management Senior management continue to focus on contracting the Explorer and are having a number of discussions on long-term contracts. Jasper has also acquired a minority stake in Vantage (VTG US), a listed drillship and semi operator. We believe that this is i) a good financial investment given Jasper s acquisition prices and ii) may provide future co-operation benefits. Quarterly Update of Top 5 Underlying Investments Holding 4.6% Pacnet Telecommunications Pacnet, headquartered in Hong Kong and Singapore, is one of the largest Asian telecoms infrastructure and network businesses for corporate customers and wholesale broadband sales. Pacnet was created by through the merger of Asia Netcom, C2C and Pacific Internet. Through the combination of these businesses, Pacnet has built a genuine pan-asian services business for corporate customers in addition to its wholesale broadband sales. The growth prospects for its services are strong and the wholesale market is now clearly recovering from massive overcapacity. The value drivers are primarily broadband growth in all its forms across Asia, plus industry consolidation. Pacnet continues to work on the new business of developing Asian data centres, utilising our owned landing stations, and some additional property. We expect the first centre to start operations early in 2011, and in 2 years to be a major profit contributor. Aside from this, revenue growth has slowed with depressed capex in the telco sector, but we expect a steady pickup in activity in H Pacnet raised $300m in 5 year senior secured guaranteed notes in the markets which was five times oversubscribed. Monthly Commentary Market Review In November, the portfolio posted a negative return during the month which started positively, but markets turned negative due to a spike up in global volatility and market nervousness from the middle of the month. This began with a sudden bailout of Ireland by the IMF and the EU and a rating downgrade from AA- to A. This led to renewed concerns over bonds of highly indebted countries with Portuguese, Spanish and Italian bond spreads widening. Towards the end of the month, volatility hit its highest point when North Korea fired over two hundred shells onto South Korean territory who responded with shelling. markets promptly sold off, but saw some recovery the following day as U.S. unemployment was better than expected. These events have had no impact on fundamentals in emerging markets which remain in a very strong position, and investors are fully aware of this. We believe this sell-off is more likely to be a buying opportunity and re-affirms the increasing decision by investors to allocate more to EM where there are improving fundamentals and a trend of upgrades Performance Summary Special situations saw mixed performance ending the month with a negative return. Corporate debt, AGOL s second largest investment theme allocation, held up well posting a return of around -1%. Many EM corporate names have robust capital structures which underpins our positive view of the asset class and supports the accelerating growth of the product and continuing expansion of the issuer universe. Financial related corporate bonds were some of the worst performers with resource and telecom based credits the main exception. Diversification and name selection has played an important role in our performance and we also recorded some successful exits of positions during the month which allowed us to realise long-term gains ahead of the sell-off. EM external debt, where most of our exposure is to quasi sovereign bonds, posted a negative return which we believe is temporary. Asia was the best performing region down less than 2% with the Philippines seeing a similar return where the government announced aggressive plans to reduce external debt over the next year. Eastern Europe was down more than the overall market, although Ukraine held up relatively well where we believe confirmation from the IMF that the country s policy measures are on track will be beneficial returns going forward. After a strong November start, EM equities ended the month in negative territory. Asian equity markets were rattled after North Korea fired dozens of shells at a South Korean military base. AGOL s exposure is primarily to Chinese domestic A shares which were also negative for the month. The CSI 300, the broad equities index, declined by -7.1%, while FTSE Xinhua China A50, the large cap index, declined -9.1% in local currency terms. China continued to take action on curbing inflation without allowing the CNY to appreciate more freely by raising the reserve requirements for big banks to contain credit growth. Special Situations November saw mixed performance for special situations. Examples of the more significant positive contributors include Pacnet, which was re-valued up by the independent third party valuation agent, a big 4 accounting firm and EMTEK (emtek.co.id, 2.8% of AGOL), the Indonesian Stock Exchange Listed media company, where the share price was up over the month. Exposure to Multi Commodities Exchange of India was also positive. In addition, AGOL had a unique opportunity to gain exposure to the Asian Special Fund which invested in a portfolio of Asian special situations investments managed by at a discount to its NAV. This was strongly positive for performance in November. Exposure to Jasper, Bangkok Land and ECI Telecom were the more significant detractors to performance. Over the past year we have made some positive exits including a full realisation of Petron Corporation of the Philippines and a realisation of almost all our exposure to Bangkok Transport. We continue to work towards making exits of more mature special situations investments, particularly AEI and Pacnet. As highlighted in previous summaries, we believe that the embedded value of these special situations investments will increasingly be recognised in AGOL s NAV and that the environment on exiting businesses has improved considerably even though we may still see short-term bouts of market weakness. () Management DISCLOSURES The material relating to AGOL and the underlying investments included in this report has been prepared by Management ( ) and is provided for information purposes only and does not constitute an invitation or offer to subscribe for or purchase shares in AGOL. This material is not intended to provide a sufficient basis on which to make an investment decision. Information and opinions presented in this material relating to AGOL and the underlying investments have been obtained or derived from sources believed by to be reliable, but makes no representation as to their accuracy or completeness. Estimated results, performance or achievements may materially differ from any actual results, performance or achievements. Except as required by applicable law, AGOL and expressly disclaim any obligations to update or revise such estimates to reflect any change in expectations, new information, subsequent events or otherwise. All investments are subject to risk. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decisions. This document is issued by which is authorised and regulated by the Financial Services Authority in the United Kingdom. The information and any opinions contained in this document have
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