Sunday, 05 Sep 2010
Investment Strategy PDF Print E-mail
The Core business of Fechim Investments Limited shall be investment in selected high growth businesses that provide high and secure returns on investment in Africa and off-shore.

Sources of Capital for Growth

The Company utilizes the following four sources of capital depending on requirements, prevailing circumstances and prudence.
 
  1. Injection by existing shareholders.
  2. Private placement of new shares to new shareholders.
  3. Borrowing (short- and long-term) from financial service providers.
  4. Retained earnings.
Type of Growth

Depending on opportunities and guided by the Mission, Company philosophy and Values Fechim Investment Limited seeks to grow both organically and through mergers and acquisitions.

Selected Drivers of Growth (= Investment Vehicles)

The Company invests using a target (portfolio) mix of the following vehicles:
 
  1. Equity in quoted companies. With a long-term view we identify and buy into companies that are undervalued by the market with the objective that gains will be realized when the price of these shares go up.
  2. Private Equity/Venture Capital. We buy equity in non-quoted public and private businesses that have growth potential and require funds and probably management skills. The Company conducts a thorough due diligence before such investments are made.
  3. Local and off-shore unit trust funds. The off-shore ventures are concentrated in emerging (high-return) markets. This asset class is also used as a hedge against the risks associated with operating in one market only.
  4. Loan capital to viable businesses and projects
  5. Fixed income instruments. Here, long-term bonds are the premier choice to provide risk-free returns. While government securities have been hitherto the mainstay in this asset class, infrastructure bonds and commercial papers are expected to increase and bring higher returns.

Fechim continuously scouts for and purchases shares in high growth potential businesses, which are well managed and are undervalued by the market, hence selling at a good discount. Other considerations are:
 
  1. Diversification across companies, including acquisitions.
  2. Diversification across economic sectors and jurisdictions.
Sources of Revenue

The Company realises target revenue and profitability levels from:

  1. Realisation of capital gains from investments.
  2. Interest from loans.
  3. Dividends.