Presentation given by Douglas Clayton, CE

1. Private Equity
in
Emerging Frontiers

2. “It was the best of times, it was the worst of times,
it was the age of wisdom, it was the age of foolishness,
it was the epoch of belief, it was the epoch of incredulity,
it was the season of Light, it was the season of Darkness,
it was the spring of hope, it was the winter of despair,
we had everything before us, we had nothing before us,
we were all going direct to heaven, we were all going direct the other way…”
Charles Dickens, A Tale of Two Cities, 1859

6. CONTRARIAN FRONTIER IMPACT
INVESTORS PRIVATE EQUITY INVESTORS
Financial Returns Social Returns

7. • BEHAVIORIAL FINANCE
• CHALLENGE THE CONSENSUS
• CYCLES; REVERSIONS TO THE MEAN
FRONTIER
PRIVATE EQUITY
• DEEP VALUE NOT MOMENTUM
• AUSTRIAN ECONOMICS / LIBERTARIANISM
DR MARC FABER DR JIM WALKER JIM ROGERS
Leopard Capital Chairman Leopard Capital Director Leopard Capital Advisor

10. CHOOSING
FRONTIERS

11. Not all Frontiers are
“Emerging Frontiers”

12.  Transitional:
• War
• Disaster
• Ideology
 Poor
 Unpopular
12

13. Political Risk Index 2011 - Maplecroft
13

14. EIU’s Political Instability Index shows the level of threat posed to governments
by social protest, covering the period 2009/10.
Highest Risk = 10.0
Iraq 8.8
Cambodia 7.9
Afghanistan 7.5
Yemen 6.3
Bahrain 5.0
Libya 4.6
Syria 4.6
Tunisia 4.2
Egypt 3.8
14

15. 15

16. Southeast Asia: Caribbean: East Africa:
Cambodia Haiti Ethiopia
Laos Cuba Kenya
Vietnam Rwanda
Thailand South America: South Sudan
Myanmar Colombia
Venezuela West Africa
South Asia:
Bangladesh Central America: Central Africa
Sri Lanka Honduras
Nepal Nicaragua
Bhutan Belize Red: Extreme Frontiers
16

17. FOUR SUNRISE
ECONOMIES

18. Region Country Pop. GDP Per Cap GDP Religion
(mn) (USDm) (PPP; USD, IMF) (primary)__
Southeast Asia Cambodia 14 11 2,286 Buddhist
South Asia Bangladesh 162 100 1,697 Moslem
Americas Haiti 10 7 1,241 Voodoo
Africa Ethiopia 85 30 1,092 Christian
COMPARISON: USA 307 14,120 47,284
Tropic of Cancer
Equator

19. Cambodia Bangladesh Haiti Ethiopia

20. Region Glory Days Centuries Recent Source of Impoverishment
Cambodia Angkor 9-15th War, Marxism, Genocide, Governance
Bangladesh Pala 8-12th Governance
Haiti French Colony 18-19th Governance, Natural Disasters
Ethiopia Abyssinia 0–10th Marxism, Civil War, Governance
Invest here

21. • Compact coastal country (Florida-sized)
bordering Thailand, Vietnam, Laos
• Mostly flat: farmland, forests, long
rivers, huge lake, 440km coast, seaport
• Low-density population, youthful
(14mn people, avg. age 21)
• Sufficient farmland, water, and labor
for major agri-business
• Untapped minerals, oil and gas
• Global tourism appeal anchored by
Angkor Wat World Heritage Site
• Land bridge links Vietnam and Thailand
21

22. • World’s 7th largest population (162mn)
• Densely packed (imagine moving half of
USA’s population into Iowa)
• Fertile agricultural nation on the
low-lying Ganges Delta; flood prone
• Low-income, subsistence-based economy
moving up the value chain
• Vast pool of young, low-cost labor
• Opportunities in garments,
pharmaceuticals, and services
(IT services, health care, education etc)
• Awakening capital market
• Sovereign rating upgraded
22

23. • Once a rich French colony; now the poorest country in American Hemisphere
• Ravaged by most damaging earthquake in modern history in January 2010
• Rugged landmass, the size of Massachusetts, scenic but 98% deforested
• 5 decades of bad governance; now the “NGO Republic”
• 90% of professionals have emigrated; large Diaspora and remittance inflow
• Hard working, trainable labor force (10mn population)
• USA allows duty free garment imports
from Haiti (HOPE Act)
• Proud, vibrant culture; tourism potential
• $5-10 billion of assistance pledged
• Private sector small, undercapitalized
• Exceptional opportunities to rebuild an
entire economy, with donor support
• Political stability uncertain
23

24. • Africa’s second largest population (85m) after Nigeria; #14 in world
• Landmass the size of Texas + California, with varied terrain and climate
• Cradle of civilization, oldest human remains; among oldest independent
countries in world; never colonized; Christianized in 4th Century AD
• Marxist 1973-1991; now capitalist but state still owns all the land
• No foreign banks; telecoms monopoly
• Transport and power constraints
• Capital Addis Ababa: 3mn population
• 85% of the people are farmers
• Largest livestock herd in Africa
• Key exports: coffee, flowers, qat,
oilseeds, leather products, livestock
• Good tourism potential
24

25. Four countries with: Globalization winners:
• 94% of USA’s population • cheap labor
• <1% of USA’s economy • food based economies
• early in their cycles • untapped resources
• off the radar screen • Duty Free exporters

26. GROWTH DRIVERS
IN COMMON

27. THEME 1:
POWERFUL
DEMOGRAPHICS

28. 6 billion (3x) more people
in the developing world
during my expected lifetime
Source: United Nations Population Division, 2007

29. Expanding Labor Forces and Domestic Consumption in the least developed world
Source: US Census Bureau

30. Brazil and India
look fine
Shrinking Labor Forces and Consumption Ahead in Russia and China
Source: US Census Bureau

31. Source:
US Census Bureau

32. Source: World Bank

33. Source: World Bank

34. THEME 2:
BETTER
INFRASTRUCTURE

36. USA: Major Infrastructure Achievements Cambodia: Infrastructure Achievements
150 years 25 years (1995-2020)
1811 - Oregon Trail - All national highways paved (2 lane)
1869 - First Transcontinental Railroad - Trans-national railroad
1935 - Hoover Dam - New bridges on all major river crossings
1937 - Golden Gate Bridge - Seaport expanded
1956-66 - Interstate Highway Program - Several new major river ports
- Nationwide 3G and 4G phone service
- 5 hydro dams under construction
10x in
25 years

37. The Future of American Infrastructure The Future of Asian Infrastructure
Half of America’s bridges are past their Japan is donating and building
intended lifespan. Budgets are being cut. Cambodia’s largest bridge to
complete the Asian Highway

38. Similar slope to US,
10 years behind
Telecoms Monopoly
Source: World Bank

39. THEME 3:
UNBURDENED

42. Our new brewery in Cambodia faced no Government mandated:
• minimum wage
• health insurance
• social security
• handicap toilets
• sprinkler systems
• brewery license
• formulation standards
• health & safety warnings on labels
• recycling deposits on labels
• advertising prohibitions
• age and time restriction on beer sales to consumers
• different state laws to sell beer in different parts of Cambodia
• requirement to sell only to wholesalers
• Alcohol & Tobacco Tax & Trade Bureau (TTB)
• Federal Trade Commission (FTC)
• State Alcohol Beverage Control Boards
• etc.

43. THEME 4:
DEFENSIVE
AGRO-ECONOMIES

44. Food Supply Falling:
• Urban Development
• Soil Degradation
• Droughts and water shortages
• Floods
• Diminishing returns from
“Green Revolution” inputs
Food Demand Rising:
• Increasing global population
• Developing world affordability
• Rising meat demand
• Biofuels demand
Sources: Food and Agriculture Organization of the United Nations, 2009; United Nations Population Division, 2006

46. Source: World Bank

47. Cambodia Ethiopia
Bangladesh Haiti

48. HOW TO ENGAGE

49. Read
Travel
Network
Relocate
49

50. Assume world is static
Watch CNN
Consult your financial advisor
50

51. Founded in 2007 to launch pioneering private equity funds in frontier markets
A partnership of 20 contrarians with decades of investment experience in developing countries, e.g.:
• Marc Faber voted one of the World’s Five Wisest Investors – Bloomberg
• Jim Walker voted Asia’s #1 Economist for 11 consecutive years –Asiamoney
• Paul Supramaniam founder of LawAsia and one of Singapore’s top M&A attorneys
• Gordian Gaeta former Managing Partner at Booz Allen Consulting - Asia
• Andrew Fraser former Group CEO of Baring Securities
• Henry Looser former Head of Private Banking at Bank Julius Baer
• Eric Wetlaufer former Chief Investment Officer of Fidelity Research & Management
• Terry Mahony Chairman of VinaCapital Group (largest Vietnam fund manager)
• Alexandre de Lesseps Director of BlueOrchard Finance (leading global microfinance fund)
• Anthony Moody Asia Chairman, Sindicatum Carbon Capital (environmental projects)
• Robert Keith Co-founder of Charles Street International (global investment firm)
Cayman-domiciled with offices in Hong Kong, Cambodia, Laos, Haiti, Bangladesh and Sri Lanka
Licensed and regulated by Hong Kong Securities & Futures Commission
Member of EMPEA and LAVCA, signatory of UNPRI Principles

53. WWW.EMERGINGFRONTIERSBLOG.COM
www.leopardcapital.com
NEWSLETTER
WWW.LEOPARDCAPITAL.BLOGSPOT.COM
Write me at: dc@leopardcapital.com
53

54.  Exit or Expand profession
 Expatriate Note: you can bring a Leopard on your journey
 Entrepreneur
54