Investing in Asia's Frontier, With Eyes on the Horizon

The New York Times | 26 December 2012
By Ron Gluckman
Douglas Clayton, the founder and managing partner at Leopard Capital.

PHNOM PENH, Cambodia — Investors started poking around for deals here five years ago, as the war-torn country began to move past its legacy of genocide and coups. When the global financial crisis struck, Cambodia’s fast-growing economy crashed and the dollars flowing from abroad evaporated.

Douglas Clayton stayed put. In the midst of the crisis, he raised $34 million, starting the first investment fund focused on Cambodia.

“High risk also means the potential for high returns,” said Mr. Clayton, the founder of Leopard Capital.

Thomas Hugger: Only Frontier Markets Offer Uncorrelated Returns From A Troubled Global Economy

China Money Podcast | 15 October 2012

In this episode of China Money Podcast, guest Thomas Hugger, CFO of Leopard Capital, a private equity firm focused on investing in Asian frontier markets, discusses the successes and failures of his firm's investments in Cambodia, the impact on frontier markets from a slowing Chinese economy, and why frontier markets offer better risk-return profiles than emerging markets.

Listen to the full interview in the audio podcast, watch the shortened video version or read an excerpt.


Q: First give us a brief introduction of Leopard Capital?

A: Leopard Capital was founded in 2008. Our general goal is to make private equity investments in frontier markets. We've raised two funds so far. In March 2008, we raised our first private equity fund to invest in Cambodia. Another fund was raised to invest in Haiti. We are hoping to launch two additional funds to invest in Bangladesh and Bhutan this year.

Profile: Leopard Capital's Douglas Clayton

Asia Venture Capital Journal | 04 October 2012
By Susannah Birkwood

Leopard Capital CEO Douglas Clayton refused to let gun-wielding Cambodians distract him from setting up the country’s first private equity fund. He prides himself on being first on the ground in frontier markets

"You felt like you could get killed in the night and nobody would ever know."

This was Douglas Clayton's perception of Cambodia when he first visited the country as a tourist in 1991. Sixteen years later - despite having only been back on two occasions in the interim - Clayton established Cambodia's first private equity firm, Leopard Capital.

"I said that if in 16 years this country can completely transform from a very scary, dangerous place to a place where I could bring my family, in another 16 years it might be a modern country," he says by way of explanation for the move. When he first visited, the UN was going into Cambodia to enforce an election; the streets were unpaved, unlit and unclean, "and all these people were walking around with guns."

Leopard Capital hires Richard Intrator as Managing Partner and CIO for Cambodia

Leopard Capital - Press Release | September 03, 2012

Mr. Richard Intrator has joined Leopard Capital Cambodia Ltd as Managing Partner and Chief Investment Officer. Leopard Capital Cambodia Ltd. manages Cambodia’s first investment fund, the US$ 34 million Leopard Cambodia Fund which was launched in 2008. Mr. Intrator will be based in Phnom Penh, Cambodia.

Mr. Intrator has a long and distinguished career in finance, private equity, management consulting, and operations. Prior to joining Leopard Capital he was the Executive in Residence at Stamford International University (Thailand). Mr. Intrator earlier held senior roles with IMAX, Petry Media (a portfolio company of Patriarch Partners), PaineWebber, Kidder, Peabody, & Co., and Booz, Allen & Hamilton. His past Board memberships include The Lighthouse International (Vice Chairman), Juniper Content Corp., and Golden Books Family Entertainment. Mr. Intrator is a Certified Public Accountant, and has a B.S. from the Wharton School and an M.B.A. from Harvard Business School.

Leopard Capital on the Haitian Frontier

Parlons Affaires | August 20, 2012

In today’s risk-averse world, a private equity fund that actively seeks investments in developing countries sounds like an oxymoron. This contradiction, however, is the essence of Leopard Capital’s philosophy. Leopard prides itself on being a pioneer investor in pre-emerging economies.
Since 2007, Leopard has successfully raised funds for telecommunication, water, power, and housing enterprises in Cambodia and has been steadily building its funds to make investments in other Asian countries, such as Laos, Myanmar, and Bangladesh. When Leopard turned its eye towards the Americas, it found Haiti to be a natural candidate for its portfolio.

Leopard Capital Wins Acquisition International 2012 M&A Award

Leopard Capital - Press Release | August 02, 2012

The publication of the 2012 Acquisition International M&A Awards marks the culmination of a 6-month search for the world’s best M&A teams
Cambodia-based Leopard Capital has been awarded a prestigious “Private Equity Firm of the Year” designation in the 2012 Acquisition International M&A Awards. The award was presented following a 6-month investigation to determine the top Mergers & Acquisitions teams in the world. 

Acquisition International’s Press Release states “The Acquisition International M&A winners have rallied well from boom to bust, they proved resilient and are superb examples of excellence. Key to their success has been, more than ever, the ability to adapt and act creatively in business and their exceptional performance is expected to continue into next year and beyond.”

Leopard Capital launches pioneering Leopard Haiti Fund to Invest in Haiti’s Private Sector

Leopard Capital - Press Release | July 16, 2012

Douglas Clayton, CEO of Leopard Capital and Rachel Robbins, Vice President and General Counsel of IFC sign IFC’s commitment to Leopard Haiti Fund at IFC Headquarters, Washington, DC
Leopard Capital is pleased to announce the successful initial closing of Leopard Haiti Fund (LHF).  LHF is the world’s first private equity fund to operate and focus exclusively on Haiti since the 2010 earthquake.

The fund seeks to raise USD 40 to 75 million to invest in businesses in Haiti.  The first USD 20 million of this target has now been committed by three international development banks:  

  • $8.5 million by International Finance Corporation (IFC);
  • $8.5 million by Netherlands Development Finance Company (FMO), through MASSIF, a dedicated fund for SME development that FMO manages for the Dutch State;
  • $3.0 million from the Multilateral Investment Fund (MIF), member of the Inter-American Development Bank (IADB) Group.

Reviving Cambodia

By Drew Wilson, 13 April 2012

New Indochina fundraising includes Cambodia, where an investor-friendly government is trying to reverse decades of ruin.

The pioneer spirit is still around. Namely, Leopard Capital and Dragon Capital, which have recently revealed fundraising efforts that include Cambodia. The fragile nation was decimated by the Khmer Rouge, who ruled by torture and mass extermination from 1975–1979.

Cambodia’s recovery from that period is accelerating. In 2011, GDP growth was 6.7 percent and 6.5 percent is expected in 2012, according to the IMF. People, money and ideas are also flowing between Vietnam, Cambodia and Laos, creating opportunities for regional integration, sources say.

The government allows 100 percent foreign ownership and encourages private equity investment to help revive industry, says Doug Clayton, chief executive of Leopard.

The pursuit of attractiveness

Focus Asean, Volume 2 | April 2012
By Philippe Beco,
Cambodia Interview with Douglas Clayton

Cambodia is broadly applauded by investors for its openness to
foreign businesses as well as low tax and regulatory regimes.
Douglas Clayton of private equity firm Leopard Capital shares his
views on what gives the Kingdom that special factor.

A pioneer investor in frontier markets, Douglas Clayton is used to betting on Cambodia's growth potential. The founder and managing partner of Leopard Capital, the Kingdom's first private equity fund with investments in energy, financial services, real estate and consumer goods businesses, talks about the Kingdom's pull factor and the sectors investors should consider.

What should push an investor to start a business in Cambodia rather than its neighbouring countries? What are the country's competitive advantages?

Cambodia has one of the most open economies in the region. The government is not trying to control economic development as in some neighbouring countries and leaves it to the market to decide. It has an open licencing policy for most sectors and doesn't prevent the arrival of newcomers in order to protect incumbents, so it is quite easy for foreign businesses to enter this market. Cambodia is also attractive thanks to a low cost base in terms of land and labour, although it has higher energy and transportation costs.

Funds put frontier lands on the map

By David Stevenson | March 2012

Investing in frontier markets can sometimes be a lonely, even depressing experience for a fund manager. For every “go-go” country – such as Mongolia, where the local stock market has stormed ahead – there’s usually a longer, sorrier list of markets from which investors have beaten a rapid retreat.

Take the frontier markets tracked by the MSCI index. There are very few star performers: only Jamaica, Trinidad and Qatar. But there are plenty of horror stories: nearly all of eastern Europe, Sri Lanka and Bangladesh – all were down by more than 24 per cent in the past 12 months. 

In fact, frontier markets – in aggregate – have had a miserable few years, and now mostly trade on, or near, historically low valuations.

Yet for Slim Feriani of specialist fund manager Advance Emerging Capital, this just means opportunity. “Frontier markets are the cheapest equity markets globally, trading on single-digit forward earnings multiples, 1.5 times price-to-book value ratios, and an average dividend yield exceeding 5 per cent,” he says. “Frontier markets remind us of emerging markets 10 to 20 years ago, but starting from a much stronger base. And we all know how well emerging markets performed over the past 10 to 20 years.”

It’s an optimistic view – and one that fails to resonate with investors who can pick up cheap, European mega-caps at near-bargain prices. As one institutional investor told me: “Why bother with frontier markets when you’ve got such quality stuff on your doorstep?”

So I don’t envy the task faced by one of the most adventurous investors on the planet: Douglas Clayton, managing partner at Asian fund management firm Leopard Capital. 

Cambodia - The new emerging market...?

January 2012

The last time I spoke with my friend Doug Clayton our attention was focused on the unfolding and rapidly rising market in Myanmar, a country Doug is heading to shortly and one I’ll be returning to later this year with some friends. I caught up with Doug fresh off a plane from Haiti, back home in Cambodia.

Doug has lived in Asia for the past 26 years, in 5 different countries and moved from country to country as each has transitioned, or been transitioning, allowing him to pick the low-hanging fruit.
He began in Korea in 1983, then Hong Kong in 1986, Thailand in 1989, Singapore in 2001 and moved to Cambodia in 2007.

Doug has had the good fortune of visiting nearly every Asian country during the 1980’s and 90’s. This allowed him a bird’s eye view of countries in this region emerging and changing, which provided him with critical reference points to work with, something that many foreigners moving into Asia lack.

With that intro now behind us, I have had our most recent conversation transcribed below for your enjoyment. I’m sure you’ll find Doug’s thoughts enlightening… l always do.

Investors eye resourceful Burma

Farmers work in a rice field in Dala township, near Yangon, November 23, 2011

Viewpoint by Douglas Clayton Investor | January 2012

Frontier investors are eyeing Burma as its newly elected government moves to bury the country's pariah status and rejoin the global economy.
President Thein Sein has blunted human rights criticism by releasing political prisoners, relaxing press censorship, and drawing dissident Aung San Suu Kyi into the political process.
Mr Thein seems determined to lead Burma through a comprehensive program of political and economic reform and improved relations with the West.
The sudden charm offensive has caught the world by surprise, and drew the first visit to Burma by a US Secretary of State in more than 50 years.
Foreign investors toting briefcases are starting to replace backpackers on flights to Yangon.