22nd Apr 2009 07:00
22 April 2009
Further investment in IGH
Origo Sino-India PLC ("Origo" or "OSI") is pleased to announce a follow-on investment, in conjunction with Origo Resource Partners ("ORP"), of an aggregate amount of US$5 million ("the Investment") in IGH Limited ("IGH").
The Investment, which is initially in the form of new convertible loan stock to be issued by IGH, will be funded from the respective existing cash resources of OSI and ORP, and will be split on a 30:70 basis in accordance with their pro-rata shareholding in IGH. The $1.5 million investment by OSI will effectively result in OSI's equity interest in IGH Limited increasing to a maximum of 19.2% (assuming the loan stock is converted).
The Investment will be used to fund the completion of one acquisition and one proposed acquisition by IGH. The acquisitions will add critical mass to IGH's activities, as it develops into a leading global provider of health and safety, environmental and enterprise risk management services, and expands to capture significant growth opportunities in the Asia Pacific, South American and Middle Eastern markets. Completion of the acquisitions is expected within the next month.
The acquisitions of IRCA Pty Limited and proposed acquisition of a 45% interest in IRCA Middle East LLC will support this development by providing the enlarged group with:
A well established and stable management team leading a staff of over 200 experienced industry professionals;
An intellectual property base developed over 15 years comprising programmes, know-how and systems covering risk assessment, auditing, behaviour intervention, business continuity, training and software solutions;
A Middle East joint venture set up in 2007;
A leading presence in a range of attractive industrial sectors, such as the mining, petrochemical, gas, transport, construction and food industries;
On completion of the acquisition of IRCA Pty Limited, the enlarged group will be renamed IRCA Holdings Limited ("IRCA") and have a presence in 5 continents. In 2008 the enlarged group achieved revenues of $19 million on a pro forma basis, and the directors of IRCA expect the enlarged group to experience revenue growth in the 2009 financial year. The enlarged group will benefit from a blue chip client base that includes customers such as Anglo American, ArcelorMittal, Vale, SASOL, ESKOM, BHP Billiton, Unilever, BP, Volkswagen, SA Breweries, Lafarge and China Power Group.
Commenting on today's announcement, Chris Rynning, Chief Executive Officer of OSI said:
"I am delighted that Origo has been able to play such an important role in the development of IGH. This transaction provides IGH with significant growth opportunities and underlines how our strategy of investing and working with promising companies, in our chosen sectors, can deliver value to shareholders."
Carel Labuschagne, Chief Executive of IRCA said:
"The leading operating and technical expertise developed to serve South African mining and industry over many years provides us with a significant competitive advantage in an increasingly globalised market place for operational, health and safety and environmental risk management services.
"I am convinced that the combination of IRCA's significant intellectual capital with IGH and Origo's presence in China will enable us to capture opportunities in this rapidly growing market. I and the rest of my team are delighted to be working with Origo, given their track record of supporting and working with the companies in which they invest."
ENDS
Further information:
Chris Rynning
Niklas Ponnert +86 1351 106 1672
Nominated Adviser:
Smith & Williamson Corporate Finance Limited +44 20 7131 4000
Azhic Basirov
Broker:
Liberum Capital Limited +44 20 3100 2223
Simon Atkinson
Public Relations: +44 207321 0000
Aura Financial
Andy Mills / Nina Legge
Notes to editors:
Origo Sino-India PLC ("Origo"):
Origo is an established private equity investor and strategic consultancy business, which provides its shareholders with exposure to growth opportunities and private equity returns in China and India.
Origo's business model is to generate capital gains from private equity investment in growth companies from which it also generates fees for consultancy services related to further fundraisings, M&A and strategic development.
Origo is aligned with two major financial institutions which provide a source of high quality deal flow. In China, Origo works closely with China Equity, a leading private equity firm, whose Chief Executive is a member of Origo's board. In India, Origo has entered into a memorandum of understanding with SBI Capital Markets, one of the longest established companies in the Indian Capital Markets. A former chairman of the State Bank of India is also a member of the board of Origo.
Through a placement of new Origo ordinary shares in March 2008, funds managed by GLG Partners LP invested approximately £17 million bringing their total stake in Origo to approximately 29.6% of the Company's outstanding share capital.
Origo also signed a memorandum of understanding with GLG Partners LP in March 2008 to explore asset management and advisory opportunities in China, India and other markets.
On its admission to AIM in December 2006 Origo raised GBP12.8 million gross of new money via a placing of 25,673,238 Ordinary Shares at 50 pence per share. Each ordinary share carried a warrant exercisable at 55p.
Origo has a significant portfolio of investments in a range of industrial and service sectors, including mobile applications and content; natural resources and affiliated services; art and paper products; furniture; food and beverage; online gaming; anti-virus software; and bio energy.
IGH
IGH aims to become the leading global provider of operational and environmental risk management solutions to industry, focused on the mining, power, construction and manufacturing industries and on the public sector.
IGH will comprise a network of 15 subsidiaries across 5 continents. IGH is actively seeking to expand its international roll-out, both organically and by acquisition, in the key Asia Pacific, South American and Middle East markets.
In China specifically, the demand for operational and environmental risk management services is largely driven by legislative compliance and mandatory budget allocations. IGH expects recent legislative changes in that market to represent a significant growth opportunity in the years ahead.
2008 was IGH's first full year of operation, in which it set up corporate and operating infrastructure. The businesses of IGH and the two acquisitions are complementary and will be combined on completion of the transaction. On a pro forma basis, for the 2008 financial year, the enlarged group achieved revenues of approximately $19 million, pre-tax losses of approximately $0.8 million, including approximately $0.7 million of one-off costs, and had net liabilities at year end of approximately $3.2 million. The directors of IGH expect the enlarged group to experience revenue growth in the 2009 financial year and to be profitable.
Related Shares:
OPP.L