When Babcock & Brown Global Investments Ltd imploded in 2008 with $156M losses and sitting on $167M debts during the global financial crisis; ST Asset Management Ltd led by Boon Swan Foo was brought in to:
delink company from Babcock & Brown
reduce leverage and
to turnaround the company
As of FY21 Global Investments is debt.
The business is managed by a six members board and do not have employees or executive officers.
Investment portfolio consist of:
Bank contingent convertibles
China domestic bonds
Cash & other net assets
Loan portfolio and securitisation assets
Breakdown of currency are: USD, SGD, RMB, HKD, Euro, AUD, others
Sources of income are from dividend, interest, asset sale or fair value through profit or loss and forex gain / loss.
The business had been profitable since 2010 starting from a low $6.6M to high $39M in 2017 averaging $19.5M over the past 12 years.
Note: In 2018, Asia Equities suffered a loss of $8.5M.
Dividend between 2017~2021 range from 1.3 ~ 0.8 cent per share.
Balance sheet is very healthy with total asset of $311M including $42M cash against $2M total liabilities. NTA per share have improved from 0.120 to 0.196 from 2012~2021.
Alternative assets investing is complex and highly specialised. The board have done a remarkable job in turning around the business. Asset have been increasing over the years while liabilities reduced to only $2M.
Geopolitical and economic risk have increased in the past years, namely US - China trade relation, inflation and quantitative tightening, rising interest rate environment, Russia - Ukraine war and on-shoring or de-globalisation.
GIL is a good dividend play, however caution is warranted.