Borrower Overview
 

TriLinc has provided financing to an international mobile phone distributor and wholesaler of electronics products based in Hong Kong for distribution of high quality mobile phones throughout India. Founded in 1998, the borrower specializes in the distribution and trading of branded and original equipment manufacturer (“OEM”) mobile phones, cameras, music players and home appliances. The borrower was appointed to be the exclusive distributor in India for a large multinational networking and telecommunications equipment company. As India makes the transition to a digital economy, mobile phone access is vital to consumers, especially where such a large population is spread across a vast geographical region, making delivering payments and services  challenging for both the public and private sector. India has the fastest-growing smartphone market in the world, with mobile subscriptions expected to hit 1.4 billion by 2020, and the borrower utilizes its Indian trading partner to distribute to a network present in 26 of the 35 Indian states. In line with  government regulation, the company is required to maintain a maximum retail price for consumer products, which takes into account varied taxes charged in different regions, maintaining the affordability of mobile devices. TriLinc’s financing will support the distribution of high quality, affordable mobile phones throughout the country.

Market Overview

Hong Kong is classified as a high income country by the World Bank.¹ Between 2010 and 2016, GDP growth rates averaged approximately 3.4%.¹ Hong Kong’s main exports are concentrated in electrical machinery and appliances, textiles, apparel, footwear, watches and clocks, toys, plastics, precious stones, and printed material.² Conversely, the country’s main imports are focused in raw materials and semi-manufactures, consumer goods, capital goods, foodstuffs, and fuel.²

Although Hong Kong is a high-income country, an exception was made due to this borrower’s high impact in India, a country that meets TriLinc’s standards for its performance across relevant growth, stability, and access metrics.³ In 2017, it ranked 2nd across the East Asia & the Pacific region on the World Bank’s Ease of Doing Business index.⁴ Insufficient capacity to innovate and inefficient government bureaucracy are seen as the most pressing hurdles currently facing the country’s productivity and competitiveness.⁵ With a 2016 GDP of $320.9 billion,¹ the country’s well developed structural infrastructure, goods market, labor market, and financial market led the country to benefit from the estimated $450.2 billion in foreign direct investment that flowed into the region in 2016.⁶ Steady domestic demand across the East Asia & the Pacific region has helped spur regional GDP growth to 6.3% in 2016, and is projected to be maintained at 6.1% by 2019.⁷

Additional Sustainability & Impact Highlights

• The borrower has implemented a rotational, three-month training program for new staff that covers topics such as sales, marketing, trade processing, and payments. Upon completion, the new staff are able to state their preference in which department they would like to develop a career on a full-time basis.
• The borrower maintains an active CSR program in-country that provides donations to fund a Computer Education Center in Beldiha, West Bengal. Starting with an initial donation of $10,000 for computers, software and furniture, the borrower has increased donations and decided to make recurring $1,000 monthly payment to cover fixed operating costs. These donations fund the education of 20 male and 20 female students, with a
  curriculum designed to equip students to start their own businesses in the future.
• Additionally, the borrower has a proprietary brand phone manufacturing facility in India that distributes 29 different lower priced phone styles throughout the country through over 530 distributors and 25,000 retailers. Through this brand’s CSR initiatives, a donation program was created that donates a certain percentage of each mobile phone sale to local youth education programs.

¹World Bank, Hong Kong, 2017 ²CIA, The World Factbook, 2017: Hong Kong. ³There is no assurance that our investment in this company or this market will be successful. ⁴World Bank’s Ease of Doing Business 2017: Hong Kong. ⁵World Economic Forum, The Global Competitiveness Report, 2017. ⁶The World Bank, World Development Indicators Database, East Asia & the Pacific, 2017. ⁷World Bank, Global Economic Prospects, East Asia & the Pacific, 2017.

The above information is as of the initial date of investment: July 31, 2017.

RISK FACTORS
There is no guarantee that TriLinc’s investment strategy will be successful. Investment in a non-listed LLC involves significant risks including but not limited to: ownership is restricted; no secondary market; limitation on liquidity, transfer and redemption of ownership interest; distributions made may not come from income and, if so, will reduce the returns, are not guaranteed and are subject to management discretion. TriLinc selects investments and conducts operations on behalf of its clients, and will face conflicts of interest. Investment with TriLinc is not suitable for all investors. Securities Offered through CommonGood Securities, LLC, a member of FINRA and SIPC.

An investment with TriLinc carries significant fees and charges that will have an impact on investment returns. Information regarding the terms of the investment is available by contacting TriLinc. This is a speculative security and, as such, involves a high degree of risk. Investments are not bank guaranteed, not FDIC insured and may lose value or total value. Some investments may have been made in an investment vehicle that is no longer open for investment. The highlighted investment may or may not have been profitable. There is no guarantee that future investments will be similar.

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