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Providential
Holdings capitalizes on the unique opportunities in Vietnam to provide Merger and
Acquisition advisory services to growing Vietnamese companies while building a diversified
portfolio of high-value oil and gas assets in the US
Services
Management Services
(PRVH.OB)
Providential Holdings, Inc.
17011 Beach Boulevard
Huntington Beach, CA 92647
Phone: 714-843-5450, Ext. 5455
Henry D. Fahman
Chairman, President and CEO
Interview conducted by:
Walter Banks, Publisher
CEOCFOinterviews.com
January 12, 2006
BIO:
Henry D. Fahman, Chairman & CEO
Mr. Fahman has over twenty years of experience in general management, finance, investments
and mergers and acquisitions. He holds a B.S., magna cum laude, in business administration
with emphasis in finance and economic analysis and policy from the University of Berkeley,
CA and is a graduate of the Advanced Management Program (AMP) from Harvard Business School.
He also attended programs in Corporate Strategy, Mergers and Acquisitions, and Advanced
Management at Stanford Graduate School of Business and Harvard Business School.
He currently serves as a director of Jeantex Group, Inc. (OTCBB:JNTX), Honorary Chairman
of the Business Advisory Council of the National Republican Congressional Committee,
member of the Presidential Business Commission, Chairman of Union College of California,
and member of the Board of Directors of several reputable non-profit organizations.
Company Profile:
Providential Holdings, Inc. (PHI), specializes in merger and acquisition advisory services
and engages in other selective business activities, especially oil and gas. PHI was
organized in 1982 as JR Consulting, Inc. and changed its name to Providential Securities,
Inc. in January 2000. Further, it changed its name to Providential Holdings, Inc. in
February 2000. Providential Holdings is based in Huntington Beach, California.
CEOCFO: Mr. Fahman, how long have you been running the
company and will you give us some historical background?
Mr. Fahman: “Providential Holdings came into being
through a merger with a company called JRCI, back in January of 2000. At that time, JRCI
was involved in merger and acquisition activities and also handling two modeling agencies,
one in Los Angeles and one in New York. When it merged with a privately held company
called Providential Securities, we changed the name to Providential Holdings. Towards the
end of the year 2000, Providential Securities stopped its operation in the brokerage
business and changed the business model into the present form. We have become a holding
company, focused on merger and acquisition services, both advisory and proprietary. We
have several subsidiaries and minority interests under our umbrella.
As for myself, I was originally born and raised in Viet Nam and went through the Viet Nam
war. After the fall of Saigon, I organized a boat and escaped with fifty-five people
aboard to Indonesia in 1981 where I became a Resettlement Coordinator for the United
Nations High Commissioner for Refugees. I served in that capacity for about a
year-and-a-half and was resettled in California in October 1982. I went back to college,
attending the under-graduate program in business administration at UC Berkeley, with
emphasis in finance, economic analysis and policy. After that, I went to work for a
regional brokerage firm in Portland, Oregon and then for A.G. Edwards and Sons. I then
started my own securities brokerage firm, which offered stocks, bonds, mutual funds,
options, futures, insurance products, investment advisory services, etc for about ten
years. We had an office at Number One World Trade Center on the 85th floor
right before 9/11. I have also attended several Executive Education programs at Stanford
Graduate School of Business and Harvard Business School, such as Mergers and Acquisitions,
Corporate Strategies, and Advanced Management, especially the Advanced Management Program
at Harvard, which is the flagship program that they have offered for executives of major
companies.”
CEOCFO: How long have
you been with Providential Holdings?
Mr. Fahman: “I have been with Providential Holdings
since 2000.”
CEOCFO: What is your
business model?
Mr. Fahman: “We adopt a three-pronged business model. We
acquire and consolidate undervalued opportunities in selective high-growth industries. Our
forte is in the merger and acquisition advisory services. We use that expertise to acquire
target companies and consolidate them, to increase the value for everyone involved, and
provide advisory services to other companies as well. We also assist other emerging
companies whose production and operational capability can be brought to speed relatively
quickly when market acceptance occurs. We tend to take minority interests in our
client-partner companies in order to align with their long-term interest. We also look at
special situations in various industries that may yield exceptional value for our
shareholders. These are ways we create value for ourselves, especially by helping other
companies create value for themselves.”
CEOCFO: You then have
multiple revenue streams.
Mr. Fahman: “We earn a small portion in cash from our
advisory services, but the majority is in equity interests in our client-partner
companies. We also have subsidiaries that are generating revenues. We have just recently
launched Providential Oil and Gas, a subsidiary that focuses on the energy industry. This
operation and others will bring revenue streams to the parent company.”
CEOCFO: Do you ever take
your subsidiaries public?
Mr. Fahman: “We have declared stock dividends in a
number of our subsidiaries. For example, ATC Technology Corp, a company we have owned,
will be filing soon to become public company after its audit is completed, most likely by
the end of January 2006. We also have Irvine College of Medical Sciences, with plans to
take it public, and a couple more down the road.”
CEOCFO: How many
companies do you have currently in your portfolio?
Mr. Fahman: “We have several. We have removed from our
website those companies that are not very active and kept those that will have impact. We
have minority interest in three public companies, Bio-Warm Corporation (Pink Sheets:
BOWC), Nettel Holdings (OTCBB: NTTL) and Jeantex Group, Inc. (OTCBB: JNTX). The
operational components we currently have include: Providential Oil and Gas, Providential
Capital, which is our M&A arm, Provimex, an import/export company, Provimex-HTV, which
is a joint venture with a Vietnamese company in Ho Chi Minh City, and Touchlink
Communications, which focuses on Voice-over-IP and long-distance services.”
CEOCFO: I know you have
companies all over the world; will you tell us where they come from?
Mr. Fahman: “At the present, our main focus is with the
Pacific Rim; mainly companies in China, Korea and Viet Nam. Those are the countries where
we have the most intimate knowledge of and we have working relationships with key people
there. If there is an opportunity elsewhere that justifies our energy and focus, then we
will be glad to investigate.”
CEOCFO: Have you looked
at any American companies?
Mr. Fahman: “Yes, the U.S. is our own backyard and part
of our major attention.”
CEOCFO: How do you go
about finding your companies?
Mr. Fahman: “We contact companies directly, we have a
network of referrals and many companies come to us through word-of-mouth as well; they
contact us, read our news. There are companies in Europe or Asia that also contact
us.”
CEOCFO: You then do your
research and homework on them and decide if they are worth the investment, is that
correct?
Mr. Fahman: “Yes, and most of our success is based on
word-of-mouth referral.”
CEOCFO: When you bring
on a new company are you looking to change management or do you keep the old management
and try to add your knowledge?
Mr. Fahman: “Most of the time we rely on incumbent
management to begin with. We can add to their depth by bringing in additional people and
systems and structure, but most of the time we start with what we have; for example, when
we look at an acquisition or a merger target, we want to make sure that we have the right
people in place because the people factor is most crucial; you talk about money and
products but without the right people, you cannot drive the bus to the right
destination.”
CEOCFO: Do you look at
competition in your area?
Mr. Fahman: “Yes, of course. There is a saying
‘Know what’s essential, Do what’s essential and Forget the rest.’ We
believe it is important for us as a company to focus on what we do best. In our merger and
acquisition advisory services, we focus on underserved markets that may be ignored by the
major players, on small and midsized companies in the U.S. and companies of various sizes
in the Pacific Rim. We need to look out and anticipate the changes that will be happening
on the horizon and try to manage them effectively, especially disruptive changes.
Companies are constantly concerned about competitive positioning issues such as cost vs.
differentiation and how to cope with new entrants, substitutions, holdups, etc. We believe
in order to maintain the competitive advantage that we must continue to be a learning
organization and keep improving ourselves all the time.”
CEOCFO: Do you need to
be profitable to do what you do, and do you have the cash flow to continue to build out
your business?
Mr. Fahman: “Our stock price is at its lowest compared
to a year-and-a-half ago. The company’s financial situation is much stronger now than
then, in-fact, our balance sheet is strong; we have positive net worth and a funding
commitment from a major institutional investor to support our growth strategy, which we
will attempt to utilize.”
CEOCFO: What would you
say is unique about Providential Holdings?
Mr. Fahman: “I think our company is unique because of a
combination of factors. We have a tried-and-true business model and a very well
experienced, committed and highly resilient team of management. Our special advantage in
the M&A arena, especially in Vietnam and China where we have intimate knowledge and
close contact. Also, our network of partner companies that share the same set of values
that we do and the same commitment to build long-term enduring value for shareholders. We
have spent a lot of time building the foundation to get to where we are today and we are
ready for the next stage of continual growth and bright future for our shareholders. We
have decided to focus on what we do best to create value for the Company and believe it is
good for institutional and private investors to get involved as we move forward from
here.”
CEOCFO: Do you feel that
there is a particular geographic region that is difference maker for you?
Mr. Fahman: “I am looking at the opportunity in Vietnam
right now with their plan to join the WTO (World Trade Organization) and with the
increasing relaxation of their regulations. Our position is for the future in Vietnam and
how that relationship will help create additional significant value for our company and
for businesses in Vietnam. Last October, we held a series of seminars, which attracted
about 450 top executives of companies and businesses. Many of them have inquired in having
us help them become public or reposition to access Western capital markets to further
their growth. Many of them have become our clients and some of them are major
conglomerates. One company for example is an import/export conglomerate that has several
subsidiaries underneath it, a company that belongs to the Ministry of Trade in Vietnam;
their annual revenues now are about $250 or $300 million dollars. They control about a
quarter of all the coffee that is going out of Vietnam and about 25% of all the black
pepper export. By helping them get to the next stage, we can set an example for other
Vietnamese companies to follow and engage our services. We believe we are very
well-positioned to assist many of these Vietnamese companies that will be able to utilize
the western capital markets as well as management best practices, among other things, to
help them grow and benefit the whole country.”
CEOCFO: Do you have the
relationships in government?
Mr. Fahman: “Yes we do. One of the major advantages we
have with respect to Vietnam is relationships.”
CEOCFO: In closing, are
you looking to build on your retail or institutional base of investors?
Mr. Fahman: “We need both. It is important to have
retail investors, to have a broad base of shareholders, and at the same time, to have the
support of institutional investors as well.”
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