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AFC Asia Frontier Fund
21. Executive Summary 32. Why Frontier Markets 43. Asia Frontier Capital 144. Investment Objective 175. Investment Strateg...
Objectives• Achieve long-term capital appreciation by investing in listed equities of companies that havetheir principal b...
4
5
6Excellent upsidepotential due tohigh GDP growthLow correlationto developedmarketsDiversificationYoung Population
7Attractive Valuations• Attractive P/E valuations (9.9x) compared to Global and Emerging MarketsIndex P/E – Forecast 12-mo...
8Low Correlation to Developed Markets Ensures Asset Diversification• Frontier markets have low correlation to the MSCI Wor...
9Future Emerging Markets• High GDP CAGR of 7% at a pre-emerging stage• Forecasted to increase at a faster rate than BRIC a...
10Myanmar7%Sri Lanka9%Others9%Vietnam18%Bangladesh15%Pakistan23%Iraq19%Bhutan2%Maldives3%Mongolia15%Laos12%PapuaNewGuinea2...
11Others3%Cambodia3%Sri Lanka3% Nepal5%Iraq5%Myanmar10%Vietnam15%Bangladesh27%Pakistan29%Maldives2%Bhutan4%Mongolia18%Papu...
12High Growth + Diversification• High GDP growth of 6.9% in 2012 and 7.7% expected in 2013• A single investment vehicle th...
13Governments Are Attempting To Increase FDI• Increasing productivity through transfer of skills, technology,and job oppor...
14Proven Expertise In Frontier Markets• The founder and CEO, Thomas Hugger, has more than 20 yearsexperience in investing ...
15AFC Frontier Capital Limited - Portfolio Manager• Thomas Hugger•27 years in private banking, managing portfolios of list...
16AFC Frontier Capital Limited – Investment Analyst• Ruchir Desai• MBA Graduate in Finance from CUHK Business School,The C...
• Achieve long-term capital appreciation by investing in listed equities ofcompanies that have their principal business ac...
18Top-downApproachValue /GrowthRiskMitigationCash
• Invest in target countries large cap and liquid stocks (core portfolio) withstock positions ranging from 2% to 5%, and m...
20Country/Sector ApproachIn addition to AFC Frontier Fund’s core investment themes (Consumption,Infrastructure, and Financ...
21Target Countries(AFC Asia Frontier Universe)• Bangladesh• Bhutan• Cambodia• Iraq• Laos• Maldives• Mongolia• Myanmar• Nep...
22Risk Mitigation Focus on earnings growth, free cash flow and value as the key driver forhigh returns In-depth due dili...
23
24NAV as of 31st May 2013USD-A EUR-A CHF-A USD-B EUR-B CHF-BNAV $1,133.62 n/a CHF 1,165.67 $1,139.67 n/a n/aMonthly Perfor...
25Monthly Performance AFC Frontier Fund (Non-US) Class AJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD2012 USD+0.90% ...
268509009501,0001,0501,1001,1501,200Mar12Apr12May12Jun12Jul12Aug12Sep12Oct12Nov12Dec12Jan13Feb13Mar13Apr13May13IndexedRetu...
27Amongst the top 6% of funds as at the end ofMay 2013• AFC Asia Frontier Fund’s 3 month , year todate and 1 year performa...
28Growth in Fund Size and Number of Clients0246810121416-5001,0001,5002,0002,5003,0003,5004,000Private Clients (RHS)Instit...
290.0%4.0%8.0%12.0%16.0%20.0% 18.7%14.1% 13.8%12.7%9.9%7.4% 7.0%6.4%2.2%1.2%6.6%Country Allocation - May 2013
300.0%6.0%12.0%18.0%24.0%30.0%26.4%17.4%13.4%11.2%6.5% 6.3%4.5%3.2%1.4% 1.3% 1.0%6.6%0.8%Sector Allocation - May 2013
31Focus on Consumer Stocks (44% allocation)• Due to the extremely low GDP per capita in these countries, everyadditional d...
32Focus on Consumer Stocks (44%)Country P/E(Trailing) P/B Ratio Dividend YieldBangladesh – Footwear Company 9.2x 1.2x 2.4%...
33Regional Peer ComparisonCompany P/E Ratio(Trailing)P/B RatioDutch Lady Milk (Malaysia) 24.3x 3.5xFraser & Neave (Singapo...
34A Frontier Country’s Largest Bank• 40% market share, country’s largest branch network• Expected loan growth: 30% CAGR ov...
35A Gaming, Hotel and Leisure Operator• 23 years gaming monopoly, increasing number of gaming tablesand expanding leisure ...
36
37Population 151.8 m5 Year Average GDP Growth 6.2%Population of working age 90m• Growing middle-class with a youngdemograp...
38CAMBODIA• Abundant natural resources• Strategic location in dynamic region• Favourable demographics• Stable government w...
39Population 33.7m5 Year Average GDP Growth 7.1%Value of Oil Exports (USD bn) 92.69• Continuous improvement in stability a...
40Population 6.4m5 Year Average GDP Growth 8.0%Agriculture as % of GDP 33%• New-found mineral wealth is transforming thetr...
41MONGOLIAPopulation 2.8m5 Year Average GDP Growth 8.8%Least dense country in theworld1.8persons/km2• The National Develop...
42MYANMARPopulation 63.7m5 Year Average GDP Growth 5.2%Rich of natural resources87% of exportearnings• Strategically locat...
43PAKISTAN• Recent elections could lead to economicreform.• Stable relations with India• Apparel and textiles accounted fo...
44Population 6.8m5 Year Average GDP Growth 8.1%Rich of natural resources73% ofexportearnings• Port Moresby Stock Exchange ...
45SRI LANKAPopulation 20.7m5 Year Average GDP Growth 6.4%Literacy Rate 91%• South Asia’s most open economy (since1977); Pr...
46VIETNAMPopulation 90.4m5 Year Average GDP Growth 5.9%Literacy Rate 93%• A major exporter of agricultural productssuch as...
47
48Bangladesh Bhutan Cambodia Iraq LaosNominal GDP (USD billion, 2012) 118 1.6 14.2 144 8.9Population (million, 2012) 169 0...
49Maldives Mongolia Myanmar Nepal PakistanNominal GDP (USD billion, 2012) 2 6 54 18 233Population (million, 2012) 0.3 3 65...
50Papua New Guinea Sri Lanka Thailand VietnamNominal GDP (USD billion, 2012) 15.3 65 377 135Population (million, 2012) 6.8...
51Investment Manager: Asia Frontier Capital Ltd., Cayman IslandsInvestment Advisor: Asia Frontier Investments Ltd., Hong K...
52Subsequent Minimum Subscription: USD 10,000 for USD sharesInitial Subscription Price: EUR 10,000 for EUR sharesCHF 10,00...
53Thomas Hugger, Fund Manager, Hong KongEmail: th@asiafrontiercapital.comTel: +852 3904 1015, Fax+852 3904 1017Website: ww...
54This Presentation is presented solely for purposes of discussion to assist prospective investors in determining whether ...
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AFC Asia Frontier Fund

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AFC Asia Frontier Fund invests in stock exchange listed equities of the following fast growing Asian economies: Bangladesh, Bhutan, Cambodia, Iraq, Laos, Maldives, Mongolia, Myanmar, Nepal, Pakistan, Papua New Guinea, Sri Lanka and Vietnam.

Asia Frontier Capital Ltd. is the manager of the fund.

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AFC Asia Frontier Fund

  1. 1. AFC Asia Frontier Fund
  2. 2. 21. Executive Summary 32. Why Frontier Markets 43. Asia Frontier Capital 144. Investment Objective 175. Investment Strategy 186. Fund Information 237. Top 4 Stock Holdings 348. Country Snapshots 369. Terms and Conditions 5110. Contact Information 5311. Disclaimer 54
  3. 3. Objectives• Achieve long-term capital appreciation by investing in listed equities of companies that havetheir principal business activities in the high-growth frontier markets of Asia.Fund Overview• Sector focus: consumer related stocks (consumer staples and consumer discretionary),financials and infrastructure related stocks. Additionally country specific sectors/stocks liketourism in Sri Lanka or mining in Mongolia and Papua New Guinea.• Invest in target countries large cap and liquid stocks (core portfolio) with stock positionsize from 2% to 5%, and mid- to small caps (satellite portfolio) with position size from 1% to3%.• Focus on earnings growth and undervalued stocks as key drivers for returnsFirm Overview• Asia Frontier Capital , headquartered in Hong Kong is an investment management firm thatspecializes in frontier markets with experience managing funds since 2008.3
  4. 4. 4
  5. 5. 5
  6. 6. 6Excellent upsidepotential due tohigh GDP growthLow correlationto developedmarketsDiversificationYoung Population
  7. 7. 7Attractive Valuations• Attractive P/E valuations (9.9x) compared to Global and Emerging MarketsIndex P/E – Forecast 12-month (x)MSCI World Index 13.2MSCI Emerging Markets Index 11.0MSCI Frontier Markets Index 9.9Source: BloombergValue Drivers Under-researched Illiquid Misunderstood Bad PR IgnoredGrowth Drivers Economic & Social Reform Infrastructure Connectivity Low Base Consumerism
  8. 8. 8Low Correlation to Developed Markets Ensures Asset Diversification• Frontier markets have low correlation to the MSCI World Index and yield higherreturns indicating ample opportunities to find “alpha”Correlation based on 5 Years of MonthlyReturn 5-Year ReturnMSCI World Index MSCI Frontier IndexMSCI World Index 100% -21%MSCI Frontier Index 86% 100% -27%Bangladesh -18% -37% 227%Sri Lanka 4% -26% 108%Mongolia 16% -1% 870%Vietnam 78% 61% -63%Laos* 79% 78% N/APakistan 88% 79% 2%* 2 years only Source: Factset, MSCI
  9. 9. 9Future Emerging Markets• High GDP CAGR of 7% at a pre-emerging stage• Forecasted to increase at a faster rate than BRIC andeventually replace BRIC as the new mainstreamemerging markets6%7%7% 6%1%2%0%1%2%3%4%5%6%7%8%2000-2010 2010-2016CAGR of Historical and Projected GDPLeopard FrontierUniverseBRICMajor AdvancedEconomies (G7)Source: IHS Global Insight, IMF
  10. 10. 10Myanmar7%Sri Lanka9%Others9%Vietnam18%Bangladesh15%Pakistan23%Iraq19%Bhutan2%Maldives3%Mongolia15%Laos12%PapuaNewGuinea22%Cambodia20%Nepal25%Others (9%)Size of Combined Economies: US$ 752 billion
  11. 11. 11Others3%Cambodia3%Sri Lanka3% Nepal5%Iraq5%Myanmar10%Vietnam15%Bangladesh27%Pakistan29%Maldives2%Bhutan4%Mongolia18%PapuaNewGuinea38%Laos38%Others (3%)Combined Population: 616.1 million
  12. 12. 12High Growth + Diversification• High GDP growth of 6.9% in 2012 and 7.7% expected in 2013• A single investment vehicle that allows investors to diversify theirportfolio and access high growth markets that are not easilyaccessible0%2%4%6%8%10%12%14%16%18%Asian Frontier Markets will grow by 7.7%on average in 2013
  13. 13. 13Governments Are Attempting To Increase FDI• Increasing productivity through transfer of skills, technology,and job opportunitiesExpected Increase In Foreign Investors’ Participation• Myanmar has attracted foreign inflows from well reputedcompanies such as Coca-Cola, Dell, Carlsberg, Mitsubishi, etc.• Banks such as Standard Chartered and HSBC are also in theprocess of setting up operations in Myanmar• Labor intensive businesses are moving to Bangladesh fromChina due to the cheaper availability of a young skilled labor• Exxon Mobil has set up a US$ 20 bn LNG project in Papua NewGuinea which is expected to double PNG’s GDP• Tourism is growing rapidly in countries such as Sri Lanka andCambodia
  14. 14. 14Proven Expertise In Frontier Markets• The founder and CEO, Thomas Hugger, has more than 20 yearsexperience in investing in Frontier Markets• Licensed by SFC Hong Kong for Type 4 (investment advisory) and Type9 (asset management)• Asia Frontier Capital Ltd. was created in June 2013 through MBO withLeopard CapitalOngoing Cooperation with Leopard Capital• Experience managing funds in frontier markets since 2008• Conducts equity research in local offices in Bangladesh, Cambodia,Laos and ThailandAttractive Equities Identified• Identified equities with great upside potential• Access to numerous primary and secondary research sources
  15. 15. 15AFC Frontier Capital Limited - Portfolio Manager• Thomas Hugger•27 years in private banking, managing portfolios of listedand unlisted equity investments•Lived in Asia >9 years•Former Managing Director and Head of PortfolioManagement at LGT Bank, Hong Kong•Held investment positions at LGT Bank in Zurich and BankJulius Baer in Zurich and Hong Kong•Founding shareholder of one of the largest brokeragecompany in Bangladesh•Certified Financial Analyst (CFIA) and Investment Adviser(Switzerland), and Certified European Federation ofFinancial Analysts Societies (EFFAS) Financial Analyst
  16. 16. 16AFC Frontier Capital Limited – Investment Analyst• Ruchir Desai• MBA Graduate in Finance from CUHK Business School,The Chinese University of Hong Kong• Also alumnus of The Fuqua School of Business, DukeUniversity• 5 years of Equity Research experience• Previous experience in frontier markets as SummerAssociate at Leopard Asia Frontier Fund• Prior to business school was based in Mumbai, India andspent two years as a Senior Analyst at a mid marketprivate equity group• In addition, gained three years of experience as a SellSide Research Analyst covering the Indian SoftwareServices industry
  17. 17. • Achieve long-term capital appreciation by investing in listed equities ofcompanies that have their principal business activities in high-growth Asianfrontier markets.• The fund focuses primarily on investments in consumer related stocks,financials and infrastructure.• Countries included in the AFC Asia Frontier Fund Universe include Bangladesh Cambodia Iraq Laos Mongolia Myanmar Pakistan Papua New Guinea Sri Lanka Vietnam17
  18. 18. 18Top-downApproachValue /GrowthRiskMitigationCash
  19. 19. • Invest in target countries large cap and liquid stocks (core portfolio) withstock positions ranging from 2% to 5%, and mid- to small caps (satelliteportfolio) with positions ranging from 1% to 3%• Focus on free cash flow, growth potential and undervalued stocks askey drivers for returns• Top –Down Approach : Strategic country and currency allocation Company visits and research (primary and secondary) either bythe fund manager or team members based in various countriesin the AFC Asia Frontier universe• Combination of Value and Growth Gain exposure to domestic and structural growth by investing incompanies with sound business performance and management,coupled with good expansion strategies19
  20. 20. 20Country/Sector ApproachIn addition to AFC Frontier Fund’s core investment themes (Consumption,Infrastructure, and Financials), the fund is also targeting country-specificsectors that are poised for rapid growth Agriculture in Cambodia, Laos, Myanmar and Vietnam Textiles in Bangladesh and Pakistan Travel & Tourism in Cambodia and Sri Lanka Power generation in Laos Energy in Iraq and Papua New Guinea Mining in Mongolia and Papua New Guinea
  21. 21. 21Target Countries(AFC Asia Frontier Universe)• Bangladesh• Bhutan• Cambodia• Iraq• Laos• Maldives• Mongolia• Myanmar• Nepal• Pakistan• Papua New Guinea• Sri Lanka• VietnamMSCI Frontier Index• 29.6% Kuwait 1.9% Slovenia• 14.2% Qatar 1.6% Vietnam• 9.1% Nigeria 1.1% Mauritius• 8.4% UAE 1.0% Romania• 6.9% Argentina 0.9% Tunisia• 3.9% Pakistan 0.9% Jordan• 3.7% Bangladesh 0.6% Bahrain• 3.1% Oman 0.4% Ukraine• 3.0% Kazakhstan 0.4% Estonia• 2.5% Croatia 0.3% Serbia• 2.1% Kenya 0.3% Lithuania• 2.0% Sri Lanka 0.1% Bulgaria• 2.0% LebanonThe investment universe of Leopard Asia Frontier Fund consists of all countriesincluded in the MSCI Frontier Index plus other “frontier” countries not yet included.
  22. 22. 22Risk Mitigation Focus on earnings growth, free cash flow and value as the key driver forhigh returns In-depth due diligence of investment opportunities Diversify across sectors and countries to reduce non systematic risk Avoid investing in countries / currencies / sectors of which westrategically disapprove (role of the Investment Committee) No leverageCash Not fully invested in uncertain times and/or excessive valuations Holding cash will allow the fund to take advantage of opportunisticinvestments when they arise (momentum / news driven)
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  24. 24. 24NAV as of 31st May 2013USD-A EUR-A CHF-A USD-B EUR-B CHF-BNAV $1,133.62 n/a CHF 1,165.67 $1,139.67 n/a n/aMonthly Performance AFC Frontier Fund (Class A)Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD2012 USD+0.91% -7.56% -0.27% -0.26% +0.85% +3.64% -0.96% +0.62% +3.62% +0.15%CHF-0.29% -1.18% -2.62% +1.62% -1.40% +1.92% -1.82% +0.24% +2.26% -1.39%2013 USD+5.99% -1.75% -0.70% +1.12% +8.25% +13.20%CHF+5.65% +0.84% +0.61% -0.96%+11.36%+18.21%Monthly Performance AFC Frontier Fund (Class B)Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD2012 USD+0.94% -7.55% -0.24% -0.23% +0.88% +3.67% -0.94% +0.64% +3.65% +0.37%2013 USD+6.09% -1.77% -0.70% +1.17% +8.45% +13.55%
  25. 25. 25Monthly Performance AFC Frontier Fund (Non-US) Class AJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD2012 USD+0.90% -7.56% -0.27% -0.26% +0.85% +3.64% -0.96% +0.61% +3.62% +0.14%CHF-0.29% -1.18% -2.62% +1.62% -1.40% +1.92% -1.82% +0.24% +2.26% -1.39%2013 USD+5.99% -1.75% -0.70% +1.12% +8.25% +13.20%CHF+5.65% +0.84% +0.62% -0.96%+11.36%+18.21%Monthly Performance AFC Frontier Fund (Non-US) Class BJan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD2012 USD+0.94% -7.55% -0.24% -0.23% +0.88% +3.67% -0.94% +0.64% +3.65% +0.36%2013 USD+6.09% -1.77% -0.70% +1.17% +8.45% +13.54%NAV as of 31st May 2013USD-A EUR-A CHF-A USD-B EUR-B CHF-BNAV $1,133.51 n/a CHF 1,165.67 $1,139.55 n/a n/a
  26. 26. 268509009501,0001,0501,1001,1501,200Mar12Apr12May12Jun12Jul12Aug12Sep12Oct12Nov12Dec12Jan13Feb13Mar13Apr13May13IndexedReturnAFC Asia Frontier Fund USD Class A MSCI WorldMSCI Frontier Markets MSCI Frontier Markets Asia
  27. 27. 27Amongst the top 6% of funds as at the end ofMay 2013• AFC Asia Frontier Fund’s 3 month , year todate and 1 year performances are amongst thetop 6% of emerging market equity fundsglobally (1,225 funds) (net of all fees /expenses)Source: Bloomberg
  28. 28. 28Growth in Fund Size and Number of Clients0246810121416-5001,0001,5002,0002,5003,0003,5004,000Private Clients (RHS)Institutional Clients (RHS)Fund size (US$000) (LHS)
  29. 29. 290.0%4.0%8.0%12.0%16.0%20.0% 18.7%14.1% 13.8%12.7%9.9%7.4% 7.0%6.4%2.2%1.2%6.6%Country Allocation - May 2013
  30. 30. 300.0%6.0%12.0%18.0%24.0%30.0%26.4%17.4%13.4%11.2%6.5% 6.3%4.5%3.2%1.4% 1.3% 1.0%6.6%0.8%Sector Allocation - May 2013
  31. 31. 31Focus on Consumer Stocks (44% allocation)• Due to the extremely low GDP per capita in these countries, everyadditional dollar earned is spent on better quality food, water and basicnecessities• Attractive valuations of consumer stocks in Asia make these companiesstrong takeover targets• Heineken bought out Asia Pacific Breweries at a P/E ratio of 38x and aP/B ratio of 11x. This shows the confidence that multinationals have inthe future growth of South-East Asia.• KKR has invested USD 359 million into Masan Group (Vietnam) at a 44xP/E Ratio
  32. 32. 32Focus on Consumer Stocks (44%)Country P/E(Trailing) P/B Ratio Dividend YieldBangladesh – Footwear Company 9.2x 1.2x 2.4%Cambodia – Gaming Company 13.1x 3.7x 4.3%Iraq – Soft Drink Manufacturer 12.6x 1.5x 4.6%Mongolia – Bakery Products 8.8x 0.7x 0.8%Pakistan – Brewery 9.4x 1.0x 1.8%Papua New Guinea – Consumer Retail 10.6x 2.0x 4.1%Sri Lanka – Car Importer 3.0x 1.0x 9.3%Vietnam – Brewery 4.0x 1.1x 10.9%
  33. 33. 33Regional Peer ComparisonCompany P/E Ratio(Trailing)P/B RatioDutch Lady Milk (Malaysia) 24.3x 3.5xFraser & Neave (Singapore) 23.8x 11.8xNestle Malaysia 29.2x 7.4xIndofod Sukses (Indonesia) 19.8x 11.6xMayora Indah (Indonesia) 33.9x 24.6xWant Want China China 37.2x 19.6x
  34. 34. 34A Frontier Country’s Largest Bank• 40% market share, country’s largest branch network• Expected loan growth: 30% CAGR over the next 3 years• Earnings growth 2012: 24%, 2013: 44%• P/E 2012: 5.7x, P/E 2013: 4.0x• Dividend yield: 11.4%, PBV: 0.97xA Leading Generic Pharmaceutical Company• Started exports to increase sales revenue• The fund invested through a GDR with a 63% discount to the homemarket• Earnings growth 2012: 35%, 2013: 28%• P/E 2012: 11.0x, P/E 2013: 8.6x
  35. 35. 35A Gaming, Hotel and Leisure Operator• 23 years gaming monopoly, increasing number of gaming tablesand expanding leisure infrastructure• Revenue growth 2012: 18%, 2013: 23%• P/E 2012: 10.2x, P/E 2013: 8.3x• Dividend yield: 5.1%A Frontier Country’s Leading Power Plant Operator• A power generation company that builds transmission lines,electro-stations and invests in electricity generating projects inLaos• Earnings growth 2013: 29%• P/E 2012: 10.2x, P/E 2013: 8.4x• Dividend yield: 4.6%, PBV: 1.4x
  36. 36. 36
  37. 37. 37Population 151.8 m5 Year Average GDP Growth 6.2%Population of working age 90m• Growing middle-class with a youngdemographics• Increasing urbanization• The SFC has withdrawn 10% capital gain taxfor foreign institutional investors• Strategically located between India andChina.• Growing pharmaceutical, software andgarment industries
  38. 38. 38CAMBODIA• Abundant natural resources• Strategic location in dynamic region• Favourable demographics• Stable government with favourableinvestment policies• Stock market established 2011• First IPO completed in April 2012Population 14.7 m5 Year Average GDP Growth 5.4%Main industriesGarments,Tourism,Agriculture
  39. 39. 39Population 33.7m5 Year Average GDP Growth 7.1%Value of Oil Exports (USD bn) 92.69• Continuous improvement in stability andsecurity• Strategic position, availability of labor andcompetitive cost base allow Iraq to export tothe Middle Eastern Region and to the world.• Growing middle class• Low corporate tax rates of 15%• Abundant proven oil reserves (in excess of115 billion barrels)IRAQ
  40. 40. 40Population 6.4m5 Year Average GDP Growth 8.0%Agriculture as % of GDP 33%• New-found mineral wealth is transforming thetraditionally agricultural economy• Increased global commodity prices are drivinggrowth• Young population – 48% under the age of 14• Further reforms to the banking system areexpected• Government is promoting investment in SMEsLAOS
  41. 41. 41MONGOLIAPopulation 2.8m5 Year Average GDP Growth 8.8%Least dense country in theworld1.8persons/km2• The National Development and InnovationCommittee (NDIC) projects GDP growth totop 20.6% in 2014• Aggressive expansion due to foreigninvestment in large mining projects• Banks anticipated to double assets to keepup with loan growth
  42. 42. 42MYANMARPopulation 63.7m5 Year Average GDP Growth 5.2%Rich of natural resources87% of exportearnings• Strategically located between India and China• Resource rich• Far reaching political & economic reforms• Sanctions to be lifted• International support• Local stock exchange with 2 listed stocks only fordomestic investors• Exposure possible though stocks listed inSingapore
  43. 43. 43PAKISTAN• Recent elections could lead to economicreform.• Stable relations with India• Apparel and textiles accounted for nearly 60%of exports• Transport infrastructure has been givensignificant focus in the last two decades forimprovement and modernizationPopulation 178.9mHigh rates ofinward remittancesOver US$1bn/month in 2011Population ofworking age60 million
  44. 44. 44Population 6.8m5 Year Average GDP Growth 8.1%Rich of natural resources73% ofexportearnings• Port Moresby Stock Exchange with 22 stocks listed• Companies also listed overseas in Australia, HongKong and London• Resource rich: natural gas, oil, copper, gold, silver• Cash crops: coffee, copra, tea, rubber, sugar• Fishery• Tourism underdevelopedPAPUA NEWGUINEA
  45. 45. 45SRI LANKAPopulation 20.7m5 Year Average GDP Growth 6.4%Literacy Rate 91%• South Asia’s most open economy (since1977); Private sector driven (85% of GDP)and non-monopolistic• Stable economy after end of civil conflict in2009• Spectacular tourism destination• Specialty agricultural exporter (tea, rubber,spices etc.)• Future growth will be spurred byreconstruction projects and real-estatedevelopment
  46. 46. 46VIETNAMPopulation 90.4m5 Year Average GDP Growth 5.9%Literacy Rate 93%• A major exporter of agricultural productssuch as black pepper, rice and coffee• Bordered by China to the north, Laos to thenorthwest, Cambodia to the southwest, andthe South China Sea to the east• Pivoting towards a manufacturing orientedeconomy• Potential for consumer companies due toincreasing disposable income
  47. 47. 47
  48. 48. 48Bangladesh Bhutan Cambodia Iraq LaosNominal GDP (USD billion, 2012) 118 1.6 14.2 144 8.9Population (million, 2012) 169 0.7 15 33 6.6GDP per capita (USD, 2012) 700 2284 931 4287 1338Key economic characteristics Growing middleclass and largeyouth segmentBased on agriculture,forestry, tourism and thesale of hydroelectricpower to IndiaAbundant naturalresourcesAbundant oilresources andgrowing middleclassAbundant naturalresourcesGovernment style UnitaryparliamentarydemocracyConstitutionalmonarchyConstitutional monarchy.The head ofGovernment is thelongest serving leader inSE AsiaDemocraticparliamentaryfederal republicSingle party socialistrepublicPrimary stock exchange Dhaka StockExchangeRoyal SecuritiesExchange of BhutanCambodia SecuritiesExchangeIraq StockExchangeLao SecuritiesExchangeIndex DSE GeneralIndexn/a CSX Composite Index ISX General Index LSX Composite IndexForeigners allowed? Yes No Yes Yes YesHow many stocks are listed? 286 20 1 84 2Year established 1954 1993 2011 2004 2011Market cap (USD billion) 30.2 0.2 0.13 5 1.049Average daily turnover (USD million)20 0.05 0.1 5 0.1
  49. 49. 49Maldives Mongolia Myanmar Nepal PakistanNominal GDP (USD billion, 2012) 2 6 54 18 233Population (million, 2012) 0.3 3 65 28 179GDP per capita (USD, 2012) 6230 2267 908 623 1372Key Economic CharacteristicsPrincipal activitiesinvolve tourism, fishingand shippingNew-found mineralwealth istransforming thetraditionallyagricultural economyLack of infrastructureand and updatedfinancial and bankingsystemIndustry mainlyinvolves theprocessing ofagriculturalproductsWorkforce is 60million people strong;endowed with naturalgas and oilGovernment stylePresidential republic,with the President ashead of government andhead of stateConsiderable powerremains in theparliamentA presidential republicwith a bicamerallegislatureA framework of arepublic with amulti-party systemDemocraticparliamentary federalrepublicPrimary stock exchangeMaldives StockExchangeMongolian StockExchangeMyanmar SecuritiesExchange CentreNepal StockExchangeKarachi StockExchangeIndexMaldives StockExchange IndexMSE Top-20 n/a NEPSE Index KSE 100 IndexForeigners allowed? No Yes No No YesHow many stocks are listed? 6 336 2 322 639Year established 2008 1991 1996 1992 1947Market cap (USD billion) 0.5 1.3 n/a 4.8 42.5Average daily turnover (USD million) 0.001 0.2 0.001 0.5 50
  50. 50. 50Papua New Guinea Sri Lanka Thailand VietnamNominal GDP (USD billion, 2012) 15.3 65 377 135Population (million, 2012) 6.8 20 64 90GDP per capita (USD, 2012) 2255 3138 5850 1498Key economic characteristics Mineral deposits, including oil,copper, and gold, account for72% of export earningsTourism andICT/services haveemerged as importanteconomic activitiesHeavily export-dependenteconomy, with exportsaccounting for more than two-thirds of GDPAgricultures share ofGDP declined from 32%in 1990 to 17% in 2009;manufacturing isincreasingGovernment style Constitutional monarchy withparliamentary democracy,relatively unstableThe two main politicalparties are bothcommitted to freemarket principlesConstitutional monarchy undera parliamentary democraticsystemA one-party communiststatePrimary stock exchange Port Moresby Stock Exchange Colombo StockExchangeStock Exchange of Thailand Ho Chi Minh StockExchange / Hanoi StockExchangeIndex KSI ASPI SET Index VN IndexForeigners allowed? Yes Yes Yes YesHow many stocks are listed?19 281 541 704Year established 1999 1985 1975 2000Market cap (USD billion) 51 17.7 280 41Average daily turnover (USD million)0.1 21 700 48
  51. 51. 51Investment Manager: Asia Frontier Capital Ltd., Cayman IslandsInvestment Advisor: Asia Frontier Investments Ltd., Hong KongFund Base Currencies: USD, EUR, CHFSubscription Frequency: Monthly, 5 business days before end of monthRedemption: Monthly:- 90 days prior notice for class A shares- 180 days prior notice for class B sharesManagement Fee: 1.8% p.a. of NAV for class A shares1.5% p.a. of NAV for class B sharesPerformance Fee: 10% NAV appreciation above 3 month USD-LIBOR+2% and high water mark for class A shares8% NAV appreciation above 3 month USD-LIBOR+2% and high water mark for class B sharesInitial Minimum Investment: USD 100,000 for USD sharesEUR 80,000 for EUR sharesCHF 100,000 for CHF shares
  52. 52. 52Subsequent Minimum Subscription: USD 10,000 for USD sharesInitial Subscription Price: EUR 10,000 for EUR sharesCHF 10,000 for CHF sharesInitial Subscription Price: USD 1,000 for USD sharesEUR 1,000 for EUR sharesCHF 1,000 for CHF sharesSubsequent Subscription Price: NAVCountry/Region Focus: Asia Frontier MarketsInitial Launch Date: 30 March 2012Valuation Day: Last day of each calendar monthMain Custodian Bank: Deutsche Bank, SingaporeAuditor: KPMG, Cayman IslandsAdministrator: Amicorp Fund Services Asia Pte Ltd., SingaporeLegal Advisor: Cayman Islands: Ogier, Hong KongUS: Bingham McCutchen LLP, Boston
  53. 53. 53Thomas Hugger, Fund Manager, Hong KongEmail: th@asiafrontiercapital.comTel: +852 3904 1015, Fax+852 3904 1017Website: www.asiafrontiercapital.com
  54. 54. 54This Presentation is presented solely for purposes of discussion to assist prospective investors in determining whether they have a preliminary interest in the investment opportunity describedherein. Under no circumstances is it to be used or considered as an offer to sell, or a solicitation of an offer to buy, any security or other interest in AFC Asia Frontier Fund, AFC Umbrella Fund orany other fund related thereto (the “Fund”). Offers and sales of interests in the Fund will not be registered under the laws of any jurisdiction and will be made solely to qualified investors under allapplicable laws. Potential investors must read the entire Offering Memorandum delivered by the Fund and the disclosure in this Subscription Agreement. Nothing contained herein shall be deemedto be binding against, or to create any obligations or commitment on the part of, any potential investor or the Asia Frontier Capital (the “Fund Sponsors”). The Fund Sponsors reserve the right, intheir sole and absolute discretion with or without notice, to alter the terms or conditions of this Presentation and the Fund and/or to alter or terminate the potential investment opportunity describedherein. Potential investors are not to construe this Presentation as investment, legal or tax advice. Prior to making any potential investment, potential investors should consult with their own legal,investment, accounting, regulatory, tax and other advisors to determine the consequences of the potential investment opportunity described herein and to arrive at an independent evaluation ofsuch potential investment opportunity.By accepting this Presentation, the recipient agrees not to copy, distribute, discuss or otherwise disclose this Presentation or the contents hereof (including the potential investment opportunitydescribed) or any other related information provided by the Fund Sponsors or by its agents to any person other than employees of recipient evaluating this potential investment opportunity onrecipient’s behalf without the prior written consent of the Fund Sponsors.While the information contained herein has been obtained from various sources which the Fund Sponsors believe, but does not guarantee, to be reliable, the Fund Sponsors do not represent thatit is accurate or complete and it should not be relied upon as such. No person has been authorized to give any information or make any representation or warranty regarding the subject matterhereof, either express or implied, and, if given or made in this Presentation, in other materials or verbally, such information, representation or warranty cannot and should not be relied upon nor isany representation or warranty made as to the accuracy, content, suitability or completeness of the information, analysis or conclusions or any information furnished in connection herewithcontained in this Presentation and it is not to be relied upon as a substitute for independent review of the underlying documents, available due diligence information and such other information asprospective investors may deem appropriate or prudent to review. The Fund Sponsors, their agents, their respective affiliates, and each of their respective shareholders, members, officers,directors, managers, employees, counsel, advisors, consultants and agents (“Representatives”), expressly disclaim any and all liability for express or implied representations or warranties that maybe contained in, or for omissions from or inaccuracies in, this Presentation or any other oral or written communication transmitted or made available to a prospective investor or its Representatives.Without limiting the generality of the foregoing, nothing contained herein is or shall be relied upon as a promise or representation as to any matter, including, without limitation, the futureperformance of the potential investment opportunity described herein. None of the Fund Sponsors, their agents, or their respective Representatives is under any obligation to correct anyinaccuracies or omissions in this Presentation. Each prospective investor will have the sole responsibility for verifying the accuracy of all information furnished in this Presentation and in any otherdue diligence information furnished to a prospective investor, and each prospective investor shall have the sole responsibility for determining the value of the potential investment based onassumptions said prospective investor believes to be reasonable. There shall be no recourse against the Fund Sponsors or any of their Representatives in the event of any errors or omissions inthe information furnished, the methodology used, the calculations of values or conclusions. Without limiting the generality of the foregoing, any historical information or information based on pastperformance included herein is for informational purposes only, has inherent limitations and is not intended to be a representation, warranty or guarantee of future performance. All of theinformation presented herein is subject to change without notice. Actual returns to potential investors may be lower than the figures shown herein. Projected performance data shown constitutes“forward-looking information” which is based on numerous assumptions and is speculative in nature. Actual results may vary significantly from the values and rates of return projected herein. Therecan no assurance that the Fund will realize its rate of return objectives or return of investors’ capital. Potential investors should have the financial ability and willingness to accept the risks (includingwithout limitation the risk of loss and lack of liquidity) characteristic of investments in entities such as the Fund.AN INVESTMENT IN THE FUND WILL NOT BE APPROPRIATE FOR ALL INVESTORS. INTERESTS IN THE FUND WILL INVOLVE A HIGH DEGREE OF RISK AND ARE INTENDED FOR SALEONLY TO SOPHISTICATED INVESTORS WHO ARE CAPABLE OF UNDERSTANDING AND ASSUMING THE RISKS INVOLVED. INVESTORS MAY LOSE ALL OR SUBSTANTIALLY ALL OFTHEIR INVESTMENT.THE INTERESTS IN THE FUND HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE APPLICABLE SECURITIESLAWS OF ANY US. STATE OR ANY NON-U.S. JURISDICTION, AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OFTHE SECURITIES ACT AND ANY SUCH APPLICABLE LAWS. INTERESTS IN THE FUND HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE US. SECURITIES AND EXCHANGECOMMISSION OR BY THE SECURITIES REGULATORY AUTHORITY OF ANY STATE OR ANY OTHER RELEVANT JURISDICTION, NOR HAS ANY OTHER AUTHORITY OR COMMISSIONPASSED UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

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