Millennium Investment & Acquisition Company, Inc. Announces
Updated Valuation of $11.6 million for Investment in SMG Global and
updated Investor Presentation
Improved SMC Global financial performance leads to increased
valuation as it progresses towards potential Initial Public
Offering
Updated Investor Presentation Indicates Discount to Valuation of
61%
NEW YORK, NY--(Marketwired - Aug 22, 2017) - Millennium
Investment and Acquisition Co. Inc. (OTC PINK: MILC) today provided
a corporate update on its investment in SMC Global and announces
that it has updated its investor presentation which is available on
its website (www.millinvestment.com).
SMC GlobalSMC Global Securities Ltd. ("SMC Global") is a
financial services firm headquartered in New Delhi. Its products
and services include institutional and retail brokerage, equity and
commodity research, equity, commodity and derivative arbitrage and
trading, on-line trading services, investment banking, custodial
services, clearing services, distribution of mutual funds, IPOs and
insurance products, and wealth management services. SMC Global has
a significant platform across India covering over 500 cities with
more than 1.6 million individual clients, a network of over 2,400
sub-brokers. MILC believes SMC Global represents an attractive
platform in the rapidly modernizing India economy.
As previously disclosed, MILC has entered into a Right to Sell
Agreement (the "Right to Sell") with the "promoter group"
(management) of SMC Global pursuant to which MILC will have a right
to sell 100,000 shares of SMC Global back to the "promoter group"
of SMC Global on the first day of each month commencing with April
1, 2016 continuing until SMC Global completes a qualified public
offering and listing on either a primary stock exchange in India or
the Unites States. The purchase price will be the Fair Market Value
of the stock at the time of the transaction. There can be no
assurance the "promoter group" will comply with their obligations
related to the Right to Sell Agreement.
To date, pursuant to the Right to Sell, MILC has sold 1.7
million shares for total proceeds of $2.1 million, which translates
to an average price of $1.24 per SMC Global share. This translates
to cash generated of approximately $124,000 per month on average.
In addition, MILC's tax basis is $2.94 per Global share. As such,
MILC is establishing a Net Operating Loss which has potential value
related to future tax exposure. For example, if MILC were to
liquidate its entire remaining position at the average price it has
sold stock to date, it would establish an NOL of approximately $20
million.
MILC currently owns 11,904,690 shares of SMC Global. Effective
June 30, 2017, MILC today announces it has established a value of
$0.98 per SMC Global share which translates to a total value of its
SMC Global holding of $11.6 million. The value represents a private
value/liquidity discount to the average sales price of $1.24 per
SMC Global share that has been paid pursuant to the Right to Sell
which would value MILC's position at approximately $15 million.
MILC believes that the discount is warranted based on a private
company/liquidity discount and the fact that there can be no
assurance as to the continued performance and pricing for the sale
of stock pursuant to the Right to Sell or the ability to sell
MILC's entire remaining position and at what price. Having said
that, MILC acknowledges that its valuation may prove conservative
since the management of SMC Global is purchasing the shares at what
it believes to be "Fair Market Value" and they hope that it will
complete a public offering at an even higher valuation in the near
future.
In arriving at the valuation of SMC Global, MILC focused on two
primary valuation metrics (Trailing PE multiple and Price to Book
Value ratio) of a peer group of India based financial services
companies as provided to MILC by SMC Global. The following is a
summary of the information regarding the peer group:
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P/BV (x)
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TTM P/E (x)
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Mcap (INRs Mn)
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Company Name
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FY16
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FY17
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Edelweiss Fin
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4.7
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4.1
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21.5x
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174,876
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Motilal Oswal
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11.2
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9.1
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-
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161,460
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IIFL Holdings
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5.6
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4.3
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18.5x
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190,233
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Geojit Fin. Services
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5.1
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4.9
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25x
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25,171
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Emkay Global
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3.2
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2.9
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16x
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3,971
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Average
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5.1
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20.25
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The following is a summary of historical annual performance of
SMG Global:
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FY Ended
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3/31/2013
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3/31/2014
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3/31/2015
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3/31/2016
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3/31/2017
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Revenue
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53,635
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50,372
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61,240
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61,136
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75,551
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Expenses
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50,096
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46,468
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52,940
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55,322
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68,486
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Net Income
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3,539
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3,921
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8,300
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5,814
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7,065
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Revenue Growth
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-6
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%
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22
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%
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0
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%
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24
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%
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Net Income Growth
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11
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%
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112
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%
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-30
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%
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22
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%
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MILC has established a trailing PE multiple of 18x and 2x book
value as appropriate valuations metrics and has established a
weighting of 80% PE and 20% P/BV. The following summarizes the
methodology for establishing the valuation of MILC's holdings in
SMC Global:
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Valuation Based on Multiple of Net Income
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TTM Net Income
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7,065,000
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Valuation Multiple
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18.00
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SMC Global Valuation
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127,170,000
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Valuation Based on Book Value
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Assets
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242,658,000
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Liabilities
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151,375,000
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Book Value
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91,283,000
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Book Value Valuation Multiple
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2.00
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SMC Global Valuation
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182,566,000
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Weighting of Valuation
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Valuation Based on Multiple of Net Income
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80%
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Valuation Based on Book Value
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20%
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Valuation
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138,249,200
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SMC Shares Outstanding
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113,134,450
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Valuation per SMCG Share
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1.22
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MIAC Valuation
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Shares Held by MILC
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11,904,690
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MIAC % Ownership
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10.5%
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Liquidity Discount
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20%
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Valuation of MILC Position
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11,637,933
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Value per SMCG Share
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0.98
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Value per MILC Share
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1.06
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SMC Global has notified MILC that it is pursuing an initial
public offering ("IPO") and listing in the United States. There can
be no assurance as to when or if such an offering will be completed
as well as what the ultimate price per share will be if the IPO
occurs.
Updated Investor Presentation and NAV CalculationMILC announces
today that it has updated its investor presentation on its website
(www.millinvestment.com). As part of this, MILC has updated its
estimate of its Net Asset Value (NAV) to $2.81 per share which is
summarized below:
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Estimated
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Value per
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Asset Value
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MILC Share
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(Unaudited)
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(Unaudited)
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Cash
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2,600,000
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0.24
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MHC (a)
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16,600,000
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1.51
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SMC (b)
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11,600,000
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1.06
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Short term solar construction loan
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460,000
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0.04
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Other Current Assets
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65,000
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0.01
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Current Liabilities
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(545,000
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)
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(0.05
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)
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Net Asset Value (NAV)
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30,780,000.00
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2.81
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Equity Market Capitalization (8/21/17)
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12,055,795.40
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1.10
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Discount to NAV
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60.8
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%
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MILC Shares Outstanding
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10,959,814
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Notes
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(a) Valuation is based on third party appraisal as of
acquisition ($13.9 million) plus capital expenditures to date.
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(b) SMC valuation is based on MILC's estimate of value for
SMC.SMC's valuation for MILC's position is $15 million which would
add approximately $4.3 million to NAV which is $0.31 per
share.There can be no assurance as to if and when an IPO of SMC
shall occur.
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About Millennium Investment & Acquisition Company
Inc.Millennium Investment and Acquisition Co. Inc. ("MILC"),
formerly Millennium India Acquisition Co., is an internally
managed, non-diversified, closed-end investment company. MILC
currently holds a minority interest in SMC Global, an Indian
financial services company, consistent with MILC's past investment
strategy focusing on Indian investments. MILC now principally
focuses on new investments in alternative energy. Consistent with
this new strategy, MILC now owns an Activated Carbon plant in
Hawaii and is actively seeking to expand its portfolio.
MILC essentially owns two assets (in addition to cash available
for investment):
1) 10.5% of SMC Global - an India based financial services
company2) Millennium Carbon which owns an Activated Carbon plant
located in Hawaii that produces a premium grade Activated Carbon
for use in advanced energy storage.
Investors in MILC can gain financial exposure to India and
Alternative Energy which are both attractive sectors for asset
allocation.
www.millinvestment.com
About SMC GlobalSMC Global Securities Ltd. ("SMC Global") is a
financial services firm headquartered in New Delhi. Its products
and services include institutional and retail brokerage, equity and
commodity research, equity, commodity and derivative arbitrage and
trading, on-line trading services, investment banking, custodial
services, clearing services, distribution of mutual funds, IPOs and
insurance products, and wealth management services. SMC Global has
a significant platform across India covering over 500 cities with
more than 1.6 million individual clients, a network of over 2,400
sub-brokers. MILC believes SMC Global represents an attractive
platform in the rapidly modernizing India economy.
www.smcindiaonline.com
http://www.smctradeonline.com
About Millennium CarbonMillennium Carbon is a manufacturer of
premium Activated Carbon that is attractive for energy storage.
Millennium Carbon processes macadamia nutshell feedstock to produce
Activated Carbon through a two-stage pyrolysis and steam activation
facility located in Kawaihae on Hawaii Island. The plant can
process upwards of 12,000 tons of macadamia nutshells per year.
Activated Carbon is a highly porous substance that confers
benefits in various industrial and consumer applications including
in filtration, emissions, and pollution remediation. Millennium
Carbon's premium grade Activated Carbon has unique properties that
make it particularly attractive for the manufacture of
Ultracapacitors, an advanced energy storage device with significant
benefits relative to conventional batteries.
www.millcarbon.com
Cautionary Statement about Forward-Looking StatementsThis
document includes forward-looking statements within the meaning of
the U.S. securities laws. Forward-looking statements are those that
predict or describe future events or trends and that do not relate
solely to historical matters. You can generally identify
forward-looking statements as statements containing the words
"believe," "expect," "will," "anticipate," "intend," "estimate,"
"project," "plan," "assume", "seek" or other similar expressions,
or negatives of those expressions, although not all forward-looking
statements contain these identifying words. All statements
contained in this document regarding our future strategy, future
operations, future prospects, the future of our industries and
results that might be obtained by pursuing management's current or
future plans and objectives are forward-looking statements. You
should not place undue reliance on any forward-looking statements
because the matters they describe are subject to known and unknown
risks, uncertainties and other unpredictable factors, many of which
are beyond our control. Our forward-looking statements are based on
the information currently available to us and speak only as of the
date of the filing of this document. Over time, our actual results,
performance, financial condition or achievements may differ from
the anticipated results, performance, financial condition or
achievements that are expressed or implied by our forward-looking
statements, and such differences may be significant and materially
adverse to our security holders.
Contact:David H. LesserCEO+1 (212)
750-0371dl@millinvestment.comInvestor RelationsPCG Advisory
GroupKirin
SmithCOOksmith@pcgadvisory.com646.863.6519www.pcgadvisory.com
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