I have just returned from an extensive tour with my family to some of the world’s greatest architectural treasures and a trip that took in stays in Maharashtra’s great city of Mumbai (or Bombay as all my Indian friends seem to continue to call it), India’s capital Delhi, the great fortress cities of Rajasthan and Uttar Pradesh (Agra).
My overwhelming impression was of the vast numbers of Indian tourists from up and down the country who take the opportunity of the school holidays to visit these magnificent historical sites. As foreigners, we stood out like sore thumbs although we were greeted with exemplary hospitality wherever we went.
At the other extreme, India perhaps the greatest economic miracle of the last decade, still has so much abject poverty, with street kids and beggars almost ubiquitous. It struck me that if as a wealthy person, one could do any useful thing in one’s life, perhaps supporting the restoration of the monuments to India’s illustrious past (here I’m talking about the palaces, mosques, temples and fortresses built over centuries by Rajputs and Mughals) would be a good enduring benefit for the people that depend on tourism for their livelihoods (70 percent of the population of Udaipur). The work of the Aga Khan Foundation is a wonderful example of this mindset, and the work continues (Humayun’s tomb for example), and yet so much remains to be done to preserve some of the wonders of the world for posterity.
As an active investor in India, since we set up Milltrust India in 2012, I have witnessed the incredible reversal of the fortunes of a country that historically got by “despite the government”. Digitalisation has undoubtedly been Mr Modi’s greatest reform with 95 percent of the population now registered with national identity cards giving them access to banking, healthcare, education and, this year, the opportunity to stand up and be counted in the world’s largest democratic election process as India goes to the polls.
India is not the only one of the world’s most populous nations that go to the polls in 2024. Pakistan, Bangladesh and Indonesia will all have general elections although whether the outcomes will be true and fair is another matter. Like India, more than 95% of the population of Indonesia has e-KTP cards linked to a government database of citizen identities and biometrics. The country also has the largest and fastest-growing digital economy in Southeast Asia, expected to reach $130 billion by 2025, primarily led by the e-commerce industry.
Across the developed world, the indices have themselves been deceptive, with the starkest example being the performance of the Magnificent 7 in the US which are up collectively over 75 percent whilst the broader Dow Jones index. Excluding these giant tech stocks it only managed a paltry 12 percent for the year (source LSEG Datastream).
Across the growth markets of the world, the US dollar has weakened against the Mexican peso and the Brazilian real, given the impetus of nearshoring and a willingness to do business with nations closer to home as opposed to China, whose share of the trade balance fell sharply over the course of the year. As of 2023, excluding data from November and December, the US trade deficit with China has decreased by 30.16%, largely due to a significant reduction in imports from China. While a lower trade deficit with China could improve the overall trade balance of the US, it might not necessarily lead to economic growth if not accompanied by increased domestic production.
At the same time, the US trade deficit with Mexico increased by 16.31%. Moreover, the volume of trade between these two countries has been increasing since 2021. The turnaround in the fortunes of some of these oversold growth markets suggests that we may be about to enter a period of sustained recovery for Latin America, and Mexico (the world’s largest Spanish-speaking nation) in particular.
In Brazil, some listed stocks are trading a valuations that represent deep value that one could envisage one of those historic rallies that see indices double in value in the coming year. The US-listed ADR for Petrobras denominated in USD is trading on under 4x historic earnings and yielding close to 20 percent!! It is perhaps a reflection of Brazil’s China-led growth story that their economy is perhaps the most deeply threatened by both China’s economic issues and the continued effects of the Russia-Ukraine conflict.
2023 has been a huge year for Milltrust marked by some re-focus on the launch of our Multi-Family Office, East West Private Wealth (EWPW) and, following the exit from Milltrust Agricultural Investments and British Innovation Fund 1, as well as a significant investment through Milltrust Ventures into companies that are focused on addressing some of greatest challenges the human race faces today.
In January we launch our two dedicated follow-on venture funds, Future Health and Green Earth Ventures through our Singapore-based Variable Capital Company. We are also working towards the launch of British Innovation Fund II, to build on our record as the only UK-focused science and technology fund that cast our net nationwide in pursuit of the most compelling science and innovation coming from UK universities and places of learning. I’m immensely proud of the portfolio as it stands today. Our focus on “One Health” as a framework for building a responsible and sustainable portfolio has brought us into contact with some superb founders and unique solutions in the realm of human health, food chain security, and management of our precious planet’s limited resources through circularity, waste management and pollution control.
As founder of the first venture builder at the University of Edinburgh, we have portfolio companies that have been born out of this extensive network, which has played a huge part in creating the biggest Agri-science hub in Europe with over 160 active companies. Companies we have backed include Green Bioactives, which is revolutionising plant-derived ingredient production in partnerships with multinationals such as Unilever. BugEra, a Black Soldier Fly company spearheading sustainable agriculture with insect-based biofuel solutions working with a leading aviation fuel company, and Cody Genetics, innovating in livestock breeding through gender skew technology to reduce waste, improve productivity and improve animal welfare. Roslin Technologies, the original vehicle for all these initiatives is now focused exclusively on stem cell technology for the cultivated meat industry, where it is today a world leader. Finally, AlphaGenomics, a company first evaluated at Roslin, and led by British academics, has merged into Canadian technology platform, HerdWhistle, today delivering AI and data-driven solutions for real-time bio-informatic data capture in precision livestock management and backed by Farstarcap Investment Corp and AgSights.
In Singapore, we have made three significant investments in 2023. Shandi Global has developed a plant-based protein alternative with higher protein content than chicken, selling through multiple B2B channels including Sodexo. The challenge to produce sufficient protein to meet a huge global deficit, especially across the developing world is a huge priority and Shandi’s localised production means lower greenhouse gas emissions than other highly processed, typically soya-based alternatives.
In the realm of healthcare, and with a priority on prevention and the huge leap forward from the advent of AI, Milltrust Ventures has made a number of new investments including Oncoshot, a platform that from its base in Singapore is fast internationalising whilst advancing personalised cancer treatments through algorithmic matching of patient data with clinical trials across the globe. Backed by Mass Mutual, this has huge implications for insurance premiums but also for cancer patients who would otherwise not be able to access or afford these therapies.
Also in Singapore, we have identified life-affirming companies through our interactions with the National University School of Medicine. One such company we helped seed and advise is IRNovate, a Singapore-based company founded by British interventional radiology pioneer, Professor Kam Mangat Singh. He has developed a new, minimally invasive venous access biopsy device which is set to revolutionise a risky medical procedure for the first time in 50 years, which will result in earlier intervention for liver disease, a problem that is endemic in Asia in particular.
Back in the UK, from a team at Addenbrooke’s Hospital at the University of Cambridge, Milltrust Ventures has invested in 52North Health: Pioneering digital tools for neutropenic sepsis management, tackling this huge cause of mortality and extending lives, 52 North is also backed by UK Sepsis and MacMillan, the UK largest cancer charity.
Also in the realm of point-of-care diagnostics, Attomarker is a rapid, multi-biomarker diagnostics company with cutting-edge technology for long-COVID, infection profiling, and applications in liver function, diabetes, fertility, and much more. Attomarker developed the world’s first regulated (MHRA) COVID antibody test and the business is run by a 2nd time entrepreneur/scientist.
Jiva Ai is another incredible portfolio company delivering powerful outcomes. Backed by the Welsh Development Agency and others, Jiva Ai is simplifying AI model creation for non-technical users, enabling intuitive, natural language-driven solution development for the healthcare and life-sciences industry. Its work interpolating vast sets of prostate scan data has produced results with far greater specificity and sensitivity than the standard PSA test, which is known to lead to inaccurate diagnosis for many men every year, and often unnecessary procedures.
Another quite phenomenal Singapore-based company, first backed by Milltrust Ventures in 2018, is Prisma Ai, a leader in visual Ai solutions, specialising in predictive technologies for body behaviour, sentiment analysis, and recognition applications, and today deployed in many of the world’s airports. We first invested in 2018. Since 2020 the company’s revenues have increased by 350 percent. We expect the company to list on NASDAQ within 12 months.
Some years are dominated by extraneous factors such as the World Trade Center terrorist attacks, or COVID. 2022 and 2023 will go down in history as being years characterised by the war in Ukraine and the heinous acts of terror in Israel by Hamas, followed by the brutal reprisals against the population of Gaza. However, outside these geopolitical events, other phenomenal trends have been irreversible. These include the shift from the big metropolises to smaller fast-growing, new preferred towns and cities in the US in particular, and the tremendous flows of international capital into the safe harbours whether gold or offshore bank accounts.
The movement of globally mobile citizens to newly welcoming tax havens like the UAE has continued apace.
Perhaps the most irrepressible development of 2024 will be the continued evolution of ChatGPT, bringing about one of the biggest revolutions in communication and knowledge management in history. I’m hearing that the latest version of Chat-GPT 4 is 1600 times more powerful than the current version on general release. Shares in Open-Ai, trading in early 2023 at a company valuation of 4bn USD are now trading somewhere in excess of 100bn USD. Crypto has been an important feature of financial markets for developing special trading in US Stable Coin, which has become the de facto currency of choice for many who can’t access the USD and are trapped by exchange controls. The recovery in Coinbase by 390 percent in 2023 has been particularly notable.
Another trend which I believe will continue to perpetuate, although I have nothing but anecdotal evidence to support this assertion, is that a general falloff in global sales volumes of luxury goods will continue to be offset by dramatic price increases, as long-term trends adapt to global shifts in wealth. The prices of everything from cigars and cognac to handbags and designer clothes have gone through the roof, taking advantage of the price elasticity of luxury amongst the small group of people who can genuinely afford them, as opposed to the aspirational shopper.
Significant breakthroughs will come in electrification technology in 2024 with technological advancements in the UK, which has become something of a global leader in the space, and also in the US. This will lead to the ever-increasing adoption of alternative energy.
Other news to look forward to is the outcome of elections representing over 40 percent of the world’s population, though with a significant continuing shift to the political right. Melloni, Le Pen, Poilievre, perhaps Trump or another Republican will all likely be elected. This will hopefully prompt a massive backlash against those governments around the world who did so much damage through their mishandling of the pandemic. Get ready also for massive class action lawsuits against COVID-19 vaccine producers.
We are also likely to see mass write-downs of Private Equity and Venture Capital portfolios as companies funded during the go-go years leading up to the pandemic run out of cash. China also could present a major risk to the global economy as growth comes in at less than 4 percent precipitating a full-blown debt crisis. It is clear that deflation has already taken hold there.
In our world of private wealth, I predict a continued trend away from private banking asset management services or independent players, as investors wake up to the fact they have been stuffed with over-priced private equity funds and so-called hot deals like the now bankrupt We Work – once valued at 47 billion USD. The damage to some banks’ reputations has been incalculable.
Finally, stand by for a new era of “Carbon Quantitative Easing”. We saw a glimpse of this at COP28 when developed countries agreed to fund the Loss & Damage Fund to redress the balance for smaller, developing countries, negatively impacted by generations of fossil fuel-led industrial development. Countries will have to pay up and this is already precipitating a land grab to secure carbon credits attributable to nature-based assets in poor countries, which are already cashing their national patrimony, perhaps just a little too prematurely.
Happy New Year!
