Yoma puts US$80m in Myanmar projects

YOMA Strategic Holdings stepped up its goal to turn into a conglomerate yesterday by making not one or two, but five major moves to invest more than US$80 million in Myanmar.

The string of announcements by the Singapore-listed Myanmar play shows that the pickings can be rich in a country on the cusp of more political and economic liberal reforms.

First off the bat is Yoma's move into the education sector. The firm, which derives more than 90 per cent of its income from real estate, will set up an international school, a local one and a pre-school to sweeten the proposition of its two major residential property projects Star City and Pun Hlaing Golf Estate in Yangon.

"Our real estate will see a significant increase in demand and prices which are directly related to our investments in schools. We expect a return on investment of between 15 per cent and 30 per cent," said Yoma's executive chairman and Myanmese tycoon, Serge Pun, at a press briefing here yesterday.

Yoma, together with Education Index Management, will develop an international school for about US$40 million which will be overseen by Dulwich College International with Dulwich College in London as educational adviser.

It also plans to build a local school through a tie-up with a local firm which would cost some US$12 million. These schools will be located adjacent to the group's Star City residential project.

In addition, Yoma is partnering UK's Harrow International Management Services to build an early years centre on a 1.6 ha site (four acres) in the group's flagship upmarket Pun Hlaing Golf Estate residential project,

In the agriculture space, the group has embarked on the coffee business, a sector bursting with potential, according to Yoma's chief executive, Andrew Rickards.

"Myanmar falls squarely within the coffee belt of the world yet its coffee is not on the world stage. So, we found the biggest coffee plantation in the country which could start a new trend," Mr Rickards enthused.

Yoma inked a conditional pact with ED&F Man (EDFM) Holdings, one of the world's biggest traders of soft commodities, to plant close to 1,500 hectares of robusta coffee at Yoma's Maw Tin Estate in the Ayeyarwaddy region.

Yoma and EDFM will have an 85-15 per cent share respectively in the coffee business which would need US$20 million investments over four years.

Yoma has also tied up with local partners to invest up to US$46 million over the next five years to supply UHT dairy products to the local market. Yoma will hold a 40 per cent share in this business.

There's some heart behind this commercial strategy as the group hopes to increase the milk supplied free to school children by the Myanmar government from merely 45,000 packs a day now to 1.5 million packs eventually.

"This project is socially significant, economically viable and, therefore, sustainable and that's why it excites me," said Mr Pun, a straight-talking 61-year old mogul who is a Singapore permanent resident.

To set up cold storage and logistics facilities for up to US$12 million in Myanmar, Yoma sealed an understanding with Kokubu, one of Japan's largest food distributors and First Myanmar Investment Co (FMI).

The agriculture businesses and a commercial vehicle-leasing business will be transferred to the newly set up Yoma Agricultural & Logistics Holding (YALH).

The World Bank's International Finance Corp will provide debt and equity financing to Yoma to develop its agriculture and logistics business and will also invest up to 20 per cent equity in YALH.

There was also news on the real estate front with Yoma joining hands with FMI - Mr Pun is controlling shareholder of both firms - to develop two plots of land at FMI City in Yangon.

These big steps signal the group's strategy to balance its income stream.

"Real estate will always be a pillar of our business and it's not easy to dethrone it as it's so big," said Mr Pun. "The ideal is for us to have half our income stream from real estate and the other half from other businesses."

Yoma shares rose one cent or 1.4 per cent to 72 cents yesterday on news of these developments.