After challenging times with legacy assets, is Jade Road now in play?
“…there are other parts of Asia that are incredibly innovative from a technology perspective, like Japan, Taiwan, Korea, Australia and India. JADE is to be a more diversified portfolio with more positions and smaller investments…”
Pivoting your pan-Asian portfolio away from China isn’t capitulation. It’s about selling weighty legacy assets and doing so for a premium to the original investment.
That’s what Jade Road Investments has done. It has made a partial divestment in wind turbine blade manufacturer Meize Energy Industries which was Jade’s third-largest holding in the portfolio.
Suresh Withana is head of Jade’s investment manager and was delighted with the deal. “We were able to pull somewhat of a rabbit out of the hat by announcing that and actually getting cash for these investments, which which we think is a positive sign of things to come hopefully to the market.”
At the time of the divestment Chairman John Croft said “Exiting private equity positions held in Chinese companies requires patience as well as persistence.”
Jade doesn’t want to burn bridges with the China. The company is after all pan-Asian and China is a big player in the region spanning five geographical time zones and bordering 14 countries. Economic growth there has, according to the World Bank, elevated 800 million people out of poverty. It is now an upper-middle-income country. The opportunities for Jade though are not as forthcoming there compared to other countries within Asia.
Jade is chasing best returns, and it’s also embracing tech companies that are the best in class. Withana says tech innovation in China has now come with the added risk of potential interference from the government in China, but “there are other parts of Asia that are incredibly innovative from a technology perspective, like Japan, Taiwan, Korea, Australia and India.”
Withana and his team are multinational, cosmopolitan and determined particularly as their own money is invested in the enterprise. Withana shares investor disappointment at the recent results, however the cash realised from recent divestments will allow the company to “start looking at putting money to work in new situations as it recycles capital through its divestments.”
Listen to Suresh tell Sarah Lowther about how the business is in no rush to deploy capital and why the model going forward is to have a more diversified portfolio with more positions and smaller investments.
Below, watch Suresh explain the purpose of Jade Road…
…Suresh talks through the company’s interim 2021 results
Read the 2021 Annual Report released June ’22
Follow the company on Twitter @JadeRoadInvest
Access Equity Development’s research note
The author was remunerated but does not hold shares in the company