Investment Due Diligence – Avoiding Pitfalls in Myanmar

The Assignment

  • The client’s investment company had difficulty attracting additional investors for its project and the client wanted to understand what factors were impacting the progress, whether it was political, personal, financial, or other relevant factors to the industry.
  • The client needed to determine why its investment project vehicle was not gaining traction and was deciding whether an additional investment was a strategically sound decision given the market forces at play.
  • Undertaking due diligence in Myanmar is often a time consuming activity due to the nature of information, which is sometimes inaccurate or simply not available. Assessing the risk profile in this environment of an investment must be thorough.
  • The client needed to gain further insights into the relationships between the principals of its investment and the government agencies responsible for resource extraction.
  • An integral part of this due diligence was to also understand the regulatory landscape and impact of legal changes that impacted the ability of client’s investment to continue its operations.

The Solution

Align interests, find a partner and set up a base in Asia

  • In Myanmar, often the only way to get reliable data and information is through numerous in-person interviews with informed industry and government sources as well as stakeholders in the companies being investigated.
  • Tractus undertook reputational, relationship, regulatory and commercial due diligence interviews and reference checks. Building on the results of any previous due diligence work carried out on the investment, its shareholders and directors, Tractus conducted over 30 interviews with new and previous contacts made during earlier investigations of the company. The interviews provided a clear and up-to-date picture of the target company, its business, management team, ownership, financial position, shareholders, partners, history and reputation.
  • Tractus also confidentially interviewed customers, competitors, industry associations, government officials and informed industry sources with a knowledge of the company’s business interests in Myanmar and regionally.

Result

Suspension of further investment and minimized losses on a flailing organization

  • The due diligence revealed that client’s investment had low prospects for success in Myanmar due to on-going financial and regulatory issues preventing the investment reaching commercialization

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