March 31, 2020

A Message from Kora: Continuity and Connection During COVID-19

Dear Partners and Friends,

Kora was founded in late 2013 to invest in enduring businesses in areas where our approach could add meaningful value to our investors, portfolio companies, and the communities where we operate and invest. We launched at a challenging moment for emerging markets, and our aim was to build an ark able to weather any storm. Our investment portfolio is also designed to withstand rough seas and, where possible, to take advantage of the kind of volatility we are currently experiencing.

In our six years in business, we have experienced a number of drawdowns, whether broad-based (e.g., the 2018 emerging markets sell-off) or idiosyncratic (e.g., demonetization in India in 2016). Today, the effects of the spread of COVID-19 have resulted in the first global economic and physical lockdown that we have experienced in our lifetimes. In previous challenging periods, we have been deliberate about communicating with our partners.

In this spirit, we wanted to reach out during these extraordinary times to share the beliefs we feel will help us navigate what lies ahead:

Distance does not mean disconnection

At Kora’s founding we took what was, and remains today, an unusual approach to an investment partnership – we have local teams across five countries, with home-grown talent, working closely together with a spirit of never-ending inquiry to partner with only the most exceptional management teams. This infrastructure is centrally planned and managed, and we have very different role models for our investment philosophy and process (Munger, Klarman) and for our organizational and human-talent approach (Netflix, Danaher). We believed we could integrate these disparate influences to create our own unique brand of work, with the best aspects of local, in-country diligence combined with the best aspects of global investing. With the help of technologies that were then-nascent and a lot of old-fashioned grit, we created a team, a culture, and a process that, while separated by many miles, was in unison. We have always believed that distributed teams, with the right culture and processes, can not only function but shine, and we believe this just as much today.

Continuity in process

As the current global health crisis swiftly required us to work not just as distributed teams but as distributed – and now home-bound – individuals, we were fortunate to be able to leverage our existing business processes to ensure a seamless transition. We operate on a transparent, unified communications platform that encompasses both investment and operations teams and that relies on specific processes adhered to by all team members. This, along with an emphasis on the written word in our communications, has enabled us to function across geographies and time zones as our team has grown over the years, and also serves us well today. At the same time, the current “work from home” scene is very different from the “remote work” model that we are all used to, and we are adapting within new constraints, whether it is virtual tea times (a weekly tradition) or accommodating working parents’ schedules.

Relationships matter

Our China team was the first to experience what was effectively a country-wide lockdown in early February. Though our research and our teamwork continued largely uninterrupted, we were also focused on the mental and physical well-being of our colleagues. This included frequent check-ins as well as some in-house artistry to create a video message the entire firm collaborated on for our colleagues and interns in China. Technology and process does not obviate the need for personal relationships and culture, and we believe that purposeful connections are deeper and more meaningful than physical closeness alone. Our close relationships with management teams, developed over years of interaction, also gives us the ability to monitor their navigation during these turbulent times without interfering in their more pressing priorities.

Finding value in growth

Stock prices are down meaningfully across our markets as large swaths of economic activity have disappeared and the shape, timing, and nature of their return is largely unknowable. As we invest for tomorrow, and for the tomorrows thereafter, our investments are underpinned by two foundational beliefs. First, we believe in investing behind sustainable growth and are always thinking about where we can back teams in pursuit of it. As part of this, we are obsessive about identifying risks that could derail this growth and nullify our long-term theses. Simply said, you have to stay in the game. Second, we believe that while economic activity is cyclical, management quality is structural. We spend years researching, monitoring, and tracking what our management teams say, what they do, and how they do it. We watch how they operate in good times as well as bad ones, and through this build the earned patience to stay invested during difficult periods. While growth is challenged at present, we believe that profitable, enduring growth is an output of innumerable management reinvestment decisions, and that today we are able to buy great management decisions at great prices.

Investing goes beyond stocks

We believe that investing in our people, investing in our research, and even investing in our communities is intertwined with our ability to make good investments in our portfolio. Outside of our team and our portfolio, Kora is an active member of its local communities across the world, supporting local non-profits with both money and volunteer time during Kora Cares days annually. The economic impact of the lockdowns today is most severe on those already in the most precarious economic situation and where existing infrastructure (health, welfare) and fiscal programs are most stressed. While all our communities face this challenge, we believe that India can use all the help it can get today. The challenges faced in particular by working women and daily wage laborers is enormous and many have no access to money or food for daily consumption. We have partnered with the local foundation of a portfolio company to make some charitable contributions in India and would be happy to connect you with them if it is of interest.

Today’s global health crisis thrusts into stark relief our true, personal priorities – the safety of our friends and families, and the broader health of our communities in both physical and economic terms. We believe we have built an organization that maintains this perspective, which in turn allows us to fulfill the more immediate fiduciary responsibilities of prudently managing the capital entrusted to the Kora partnership.

With best wishes to you and your loved ones,

Nitin, Daniel & the Kora team

Disclosures

The information presented in the above post is provided for informational purposes and is intended to provide an update concerning Kora Management LP (together with its affiliates, “Kora”) and the funds and accounts managed by Kora (collectively, the “Funds”), and does not constitute an offer to sell or the solicitation of an offer to purchase any securities, including those of the Funds. The information presented in the above post is confidential and may not be reproduced in its entirety or in part, or redistributed to any party in any form, without the prior written consent of Kora, and does not constitute legal, tax, investment, or other advice, or a recommendation to purchase or sell any particular security. The information contained in the above post is current only as of the date specified, irrespective of the time of posting or of any investment, and does not purport to present a complete picture of Kora or the Funds. Past performance is not indicative of, and not a guarantee of, future results. Notwithstanding the information presented in the above post, investors should understand that Kora is not limited with respect to the types of investment strategies it may employ or the markets or instruments in which it may invest, subject to the terms set forth in the Funds’ offering and governing documents. The information included in the above post has been obtained from sources Kora believes to be reliable; however, these sources cannot be guaranteed as to their accuracy or completeness. The above post contains certain “forward-looking statements,” all of which are subject to various factors, any or all of which could cause actual results to differ materially from projected results. Nothing contained herein is designed to constitute an offer of new or additional investment advisory services.