Leopard Cambodia Fund Monthly Newsletter Issue: #3

Leopard Newsletters

Welcome to the 3rd Issue

Once again we wish to begin this newsletter by extending both a warm welcome and our thanks to those investors who have joined us over the course of the last month. Monthly closures continue until the Fund's $100m funding target is reached; the next close will take place on the 31st July 2008. Please contact our Chief Operating Officer Thomas Hugger for offering documents, subscription forms and general enquiries at: th@leopardasia.com.

Leopard's Phnom Penh Representative Office team

Portfolio News

Several months of negotiations and due diligence culminated in the successful closing last week of the Fund's first investment, originally highlighted to investors in issue No.1 of our newsletter. LCF now owns 24% of Cambo Fund Ltd., a Cambodian company formed to develop a 250 unit low rise condominium project on a 3 hectare freehold plot within walking distance of Siem Reap's city center. Siem Reap houses the world famous Angkor Wat temple complex, the ultimate destination for approximately 2/3 of Cambodia's tourists. Arrivals are projected to grow 20% this year to 2.7m, which we believe is still only the "tip of the iceberg" of this country's potential numbers. To cater for this steadily growing influx, over 100 hotels have mushroomed in Siem Reap, including luxury properties managed by Aman, Raffles, Sofitel, and Victoria. However, with a few small exceptions, apartment construction has yet to follow hotel development, despite a growing, affluent local community of expatriate hotel managers, restaurant and pub owners, Korean tour guides, and local landowners. Our partners in Cambo Fund Ltd. include a prominent Cambodian family whose construction experience lends itself perfectly to executing this project; a respected European interior designer who owns several other properties in Cambodia; and the former Chairman of the Vietnam operations of a blue chip British Estate Agency. We anticipate a favorable return on this project due to the relatively low cost of the project's land, and the dearth of competition or available open sites to meet the pent up demand for modern housing in Siem Reap. Pre-sales are slated to start by year end, and Leopard Cambodia investors will be invited to pre-book units ahead of the masses; let us know should you have potential interest.

Leopard Cambodia Investment Forum 18-19 September 2008: Phnom Penh

As we mentioned last month, the first annual Leopard Cambodia Investment Forum will take place at the Raffles Hotel Le Royal in Phnom Penh on the 18th and 19th September. Invited speakers so far include:

Chan Sophal, Senior Researcher of Agricultural Economics at the Cambodia Development and Research Institute.
Sung Bonna, Managing Director of Bonna Real Estate
Tan Sri Dr Chen Lip Keong, President/CEO of NagaCorp Ltd
Dararith Lim, local representative of GE.
Kao Thach, head of the Cambodia Stock Exchange project.
Steven Bridges, former British Ambassador to Cambodia.
Brett Sciaroni, Cambodia's leading expatriate attorney.
Inn Channy, CEO of ACLEDA Bank.

Initial attendee response has been enthusiastic and we hope to make this a showcase annual event. We have blocked a number of rooms at the Raffles at a special conference rate of $110, but these are limited so please register soon. Please also take the opportunity to join our optional follow on trip to Siem Reap where you can experience Angkor Wat and also visit our condo project site.

To download the conference documentation package (registration form on last page), CLICK HERE

Leopard in the News

Articles containing information and comment on both Cambodia and on the Leopard Cambodia Fund appear regularly in various publications and news outlets. To view the page in our website displaying links to these click HERE

Comment on Elections July 27th

On the 27th of July, Cambodians will go to the polls for the 4th general election since the end of the civil war. The elections of 1993, 1998 and 2003 were monitored by international observers and deemed to be increasingly free and fair. Expectations for this year's elections appear positive: election observer COMFREL's Head of Monitoring said the atmosphere is in fact better than in previous elections. A common site in recent days has been small convoys of gaily decorated vehicles parading through Phnom Penh, broadcasting the competing platforms of the ruling party, CPP, and main opposition party, SRP. We expect the CPP to add to its current 73 seats in the 123 seat Parliament and usher its current coalition partner FUNCIPEC into the opposition wilderness.

When one recalls that in just three decades Cambodia has hurtled from radical Khmer Rouge rule to Vietnamese-imposed Communist rule to UN bureaucratic rule to a fledgling democracy, the sight of political leaders peacefully appealing for a mandate from the people is an encouraging one. Our bet is that Cambodia will continue to widely surpass expectations over the next three decades, while some of its better-known ASEAN neighbors fall short. But you knew that already.

In the News

Moody's forecasts Cambodia's banking sector will remain stable over the next 12 to 18 months while the outlook may be negative for several regional countries, such as Vietnam and Singapore.Moody's cited Cambodia's economic growth, developments in regulatory and financial infrastructure, and growing public confidence, as reasons for stability in the bank sector. Moody's also predicted a GDP growth rate of 7.2 percent for Cambodia in 2008, down from 9.6 percent in 2007. Department of Labour reports that 300,000 young Cambodians are now entering the job market every year, of whom 16,000 are university graduates.

Maturing plantations means Cambodia will export around 50,000 tons of dried rubber to international markets over the next year, up from 30,000 this year. This will be the largest output in three decades, according to the General Directorate of Rubber Plantations. Dried rubber currently sells at US$3,310 per ton in Cambodia, up from US$2,800 last year.

The Japanese Embassy has announced that an investment protection agreement with Cambodia which has taken almost a decade to conclude, will finally come into force at the end of this month. Diplomatic notes on the trade pact, labelled the Agreement for the Liberalization, Promotion and Protection of Investment (JCBIA), were exchanged between the two nations in Phnom Penh on July 1, and will come into force July 31. China and South Korea have invested US$1.7 billion and US$1.5 billion respectively in Cambodia since 1994, while Japan has invested just US$135 million, according to Government figures.

Leopard Welcomes Summer Interns

We are pleased to welcome two talented interns at our Phnom Penh office this summer, both of whom sought out the opportunity to work with Leopard Cambodia Fund and help build a better Cambodia.

Lorida Leon is one of the first Cambodians admitted into INSEAD's MBA program. Previously she spent 8 years in Texas Instruments' Semiconductor division, where she specialised in Partner Strategy and Marketing and worked with seven different country offices. Lorida holds a MsC in telecoms engineering, and is studying her fifth language.

Jason Poh is pursuing joint Economics and Business degrees at Singapore Management University, where he serves as an Industrials Analyst in the Student Managed Investment Fund. Jason also represents Singapore in international tennis tournaments.

Lorida Leon Jason Poh