Burmese Daze (Of course sanctions

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Subject: Burmese Daze  (Of course sanctions don't have any effect?)

Far Eastern Economic Review
May 29, 1997

SHROFF

HONG KONG
Burmese Daze

Kerry Securities," says a former staffer, "is 1% of Robert Kuok's assets and
99% of his headaches." The Myanmar Fund is a small part of that 1% and it too
accounts for a disproportionate part of Kerry's headaches.

As one of the few plays on Burma, the fund seemed on to a good thing when it
was established in 1994 with a $28 million kitty for direct investments.
While other emerging-markets funds have had trouble finding anything to
invest in, the Myanmar Fund piggy-backed on its owners to take stakes in
attractive Kuok projects in Rangoon, including stakes in the Shangri-La and
Traders Hotel. The largest shareholder was Government of Singapore
Investment Corp., but HSBC Asset Management, several private Swiss banks and
top British pension funds also took stakes.

Now it appears that the Myanmar Fund is one more casualty of the disarray
that has plagued Kerry Securities since December, when falling profits
prompted the firm to slash staff and close some of its international
offices. Since then, a new team has taken over both Kerry Securities and the
Myanmar Fund.

The Dublin-listed fund currently trades fat a significant discount to net
asset value -- when it trades at all. A market maker in London says the
illiquid, closed-end fund (one with a fixed life span) was last traded in
the fourth quarter of 1996. Since then, things have deteriorated, partly
because of newly announced American sanctions against Burma.

A new fund-raising last year swelled the size of the fund to $46 million.
But virtually none of the new money has been invested, and former Kerry
Securities staffers say the new management has neglected the fund while
pocketing lucrative 2.75% annual fees.

At a meeting with shareholders in February, the new management denied
allegations of inactivity, claiming the new team needed time to sort out the
mess surrounding earlier deals. They cite doubts regarding the accuracy of
net asset values and in at least one investment, a $2.5 million stake in a
plastic-bag manufacturer for which there was no clear legal title.

Since that meeting some shareholders have met with Peregrine Securities to
discuss winding down the fund. (Peregrine would assist in selling the fund's
assets.) Says David Masters, who heads investment management for the new
regime at Kerry, "We have heard rumours that Peregrine had approached
shareholders about realizing the value of the fund, but there has been no
decision to wind it up."

Peregrine sources confirm discussions with shareholders, "who would like
something to happen," according to one, but say the fate of the fund is up
to the board of directors. 

-- Henny Sender
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