Newsletter Issue 20 – January/February 2010

Leopard Cambodia Fund Update

Leopard Cambodia Fund closed its extended fundraising period on 31 December 2009 with US$34,135,000 of committed capital. The Fund is no longer accepting new subscriptions. We extend our gratitude to each of our 107 investors for backing us during a time of global financial turmoil. We hope to see as many of you at our Annual Investors Meeting in Phnom Penh on 28 May 2010 (for details write to Polleak, [email protected])

Portfolio Notes

Leopard Cambodia Fund’s Investment Committee gave conditional approval to four more investment proposals which we hope to transact soon. Accordingly, on 29 January 2010 the General Partner issued a drawdown notice to Limited Partners in the amount of USD 7,900,000. The investment targets are minority stakes in a major bank, a microfinance institution, a seafood processing factory, and a WiMax internet company. We will publish more details once the deals are wrapped up, but for now we will mention that the targeted bank investment is an indirect holding in ACLEDA Bank Plc, one of the largest retail banks in Cambodia and the only one with a nationwide branch network. Established in 1993, ACLEDA now has 232 offices, over 7,000 staff, and more than USD 900 million in total assets.

Kingdom Breweries (Cambodia) Ltd. received its Final Registration Certificate from the Council for the Development of Cambodia (CDC), along with a basket of tax incentives. The 40-man work crew continues to transform the old Nestle factory into a modern brewing showpiece. Peter Haupenthal, our brew-master from Germany has taken his post now in Phnom Penh. Kingdom’s CEO, Peter Brongers has selected a sleek bottle design and placed the first order. There’s still a lot of work ahead, but we are planning the launch party for Kingdom Beer in July 2010. For now, here’s a peek at the new corporate logo:

CamGSM‘sbridge loan (in which LCF invested $5.0 million) just won the “TelecomFinance 2010 Asia Deal of the Year” award. The judging panel said: “This was truly a trailblazing deal. It was the largest M&A deal in the country, and the financing that accompanied it also saw the largest ever syndicated loan on Cambodian soil. The deal could potentially mark the beginning of a new dawn in Indochina.”

Team News

Leopard Capital is pleased to welcome two of the world’s most revered contrarian investors, Jim Rogers and Marc Faber, to its Sri Lanka Advisory Council. Our investment team looks forward to receiving their invaluable guidance as we sift through the best investment opportunities in post-war Sri Lanka.

Jim Rogers:

after co-founding and co-managing the spectacularly successful Quantum Fund for a decade, Jim “retired” in 1980, but remained an active private investor, financial commentator, adventure traveler, and author. An early participant in the commodities boom, Jim created the Rogers International Commodity Index in 1998. His books include Investment Biker: Around the World with Jim Rogers, Adventure Capitalist: The Ultimate Road Trip, Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market, A Bull in China, and A Gift to My Children: A Father’s Lessons For Life And Investing.

Dr. Marc Faber:

is Executive Director of Marc Faber Ltd, an investment advisory firm for private clients. He publishes the monthly Gloom, Boom and Doom Report, which highlights unusual investment opportunities around the world, and wrote Tomorrow’s Gold – Asia’s Age of Discovery, a Best-Seller in 2002. Marc is a popular speaker at investment conferences and media panels, and is Chairman of Leopard Cambodia Fund’s GP, and several other investment funds.

The Minister of Economics and Finance has appointed Leopard Capital’s CEO, Douglas Clayton as Technical Advisor to the Director General of the Securities and Exchange Commission of Cambodia (SECC), H.E. Dr. Ming Bankosal. The SECC is preparing the regulatory framework for the launch of the Cambodia Stock Exchange in 2010. Note the SECC will accept applications for securities brokerage licenses until 1 March 2010; see www.secc.gov.kh.

Douglas Clayton has also joined the Board of the Center for Khmer Studies (CKS), a non-profit organization fostering the research and teaching of Cambodian history. See www.khmerstudies.org.

In the Cambodia Press

· China offered Cambodia $1.2 billion in soft loans and grants to finance roads, bridges, ports, telecommunication, irrigation, and power transmission projects. China has also offered preferential trade access to Cambodian products.

· China’s Huadian Group will build three hydropower projects in Cambodia, including a massive 338MW plant costing $558mn, and two smaller 50MW plants. Meanwhile, Malaysia’s Leader Universal Group will build a $107.6mn transmission line project to link Phnom Penh to Kampong Cham.

· Not to be outdone, Vietnam’s Prime Minister announced his country would invest a mindboggling $6 billion in Cambodia, in industries such as power generation, food processing, fertiliser production, rubber plantations, and bauxite mining. We await details.

· Australia’s ex-Treasurer, Peter Costello, is advising a fund management group aiming to raise a $600mn investment fund for Cambodian agriculture projects.

Leopard Sri Lanka Update

Millions of Sri Lankans went to the polling booths on 26 January 2010 and peacefully re-elected President Mahinda Rajapaksa with a landslide 58% margin. This post-war reaffirmation of democracy and civilian rule represents another step in the country’s transition from battlefield to business hub. Furthermore the decisive outcome assures policy continuity for the numerous important infrastructure projects underway across Sri Lanka, including deep sea ports, power plants, dams, highways, railroads and airports. Most of these projects are being funded on concessionary terms by external donors such as China, India, Japan, and the ADB, providing billions of dollars of assistance for a country of just 20 million people.

Unnoticed by most global investors, this mini “Marshall Plan” will turbo-charge Sri Lanka’s economic efficiency and productivity, powering top-quartile economic growth for the next couple decades. Other domestic growth catalysts include the reintegration of the cut-off North and East provinces into the national economy, the return of tourists, the sharp decline of local interest rates and the reawakening of Sri Lanka’s hibernating capital markets. A massive private investment cycle is gathering force as business confidence ratchets higher and boardroom priorities shift from controlling costs to capturing fresh opportunities. We encourage you all to visit Colombo and sense the local optimism first-hand; it may be Winter in the West but it is Spring in Sri Lanka.

To invest in the “Resplendent Isle” just as it enters a secular upcycle, Leopard Capital has teamed up with leading local experts to establish Leopard Capital Sri Lanka (LCSL). LCSL is chaired by Ranjit Fernando, retired CEO of Sri Lanka’s National Development Bank, and is led by Managing Partners Nirosh De Silva and Ramanan Govindasamy, two experienced local investment bankers and business consultants. LCSL will manage two landmark funds:

Leopard Sri Lanka Fund LP is a 10 year private equity fund targeting US$100 million. It will primarily take minority positions in unlisted companies, targeting post-war growth sectors such as tourism, food processing, fisheries, consumer products, and retailing. The Fund may also help some world class Sri Lankan companies expand their businesses into less developed economies. Initial closing will be on or after 1 April 2010.

Leopard Sri Lanka Value Fund is in open-ended fund to invest in Sri Lankan listed equities. It will hold both a Core Portfolio of smaller, overlooked “deep value” stocks, and a Trading Portfolio of blue chips. The Manager will seek to collaborate with portfolio company management teams to unlock value and accelerate growth. Investors can initially subscribe at US$ 1,000 / EUR 1,000 / CHF 1,000 until 26th February 2010, and thereafter monthly at NAV. This fund offers quarterly redemptions after an initial two year lock-up. This Fund may be closed once it reaches US$ 30 million.

Our global road show gets underway in early March; please write Mohamed ([email protected]) to request appointments, marketing materials or subscription forms.

Visit Notes: Luang Prabang

We have journeyed to the Land of a Million Elephants, also known as Laos, to visit the old royal town of Luang Prabang. Luang Prabang is one of those places where even before the plane lands you already know you’re going to like it. The scenery as you descend is dramatic, with rugged, forested mountain ridges studded with gold and white pagodas, bisected below by winding mud-brown rivers. The airport turns out to be delightfully miniature and antiquated, and the immigration officers seem overwhelmed with the task of processing a small planeload of arrivals. Slow down folks, you’re in Laos.

A short drive to town brings you into the Southeast Asia of yesteryear; an architectural time capsule radiating with ambiance. The sprawling collection of colonial-era buildings led UNESCO to declare Luang Prabang a World Heritage Town in 1995. The New York Times named Luang Prabang the world’s top place to visit in 2008, and tourism dutifully spiked to 600,000 arrivals.

“People come here to do nothing, because there’s nothing to do here”, our local friend explained. My only disappointment was the discovery that my Blackberry didn’t work, but soon I understood that that was the whole point. Luang Prabang forces you to decelerate and contemplate less stressful lifestyles over a cup of strong Lao coffee and an incredibly tasty pastry. My wife: “I’m ready to retire here; I’ll plant a vegetable garden like the one over on that riverbank.” Me: “Maybe I could start a coffee shop and learn to make pastries like this…”

So what’s the town’s magic formula? A blend of things. Cool, clean air. So few cars that you can walk to dinner down the middle of the road. Friendly, soft spoken people; the women still wearing traditional sarongs. No seedy nightlife, fast food, or tour busses. Period architecture uniquely mixing French and Laotian touches. An encircling panorama of layers of mountains and rivers. Buddhist monks in vivid orange robes emerging at dawn from ancient wooden temples with curving, overlapping roofs. The list goes on.

We are encouraged to make side excursions to visit caves and waterfalls. But sadly we have come here to work, specifically to investigate the hotel market, which dominates Luang Prabang’s modest economy. For market research we visit every decent hotel and guesthouse in town, asking if they have any rooms left and what they charge. We get turned away repeatedly, and confirm by day’s end that local hotels are enjoying occupancy rates and room rates that would shock and awe their Cambodian counterparts. Demand has doubled over the past few years, while downtown supply has been constrained by the strict building preservation rules set by UNESCO (note to Cambodian officials: please come study Luang Prabang!) The upshot is that Luang Prabang is shifting up-market, with much of the new room supply catering to the super-premium segment.

All the hotels here are small boutique properties, and most are conversions. Imagination has been required, and has been delivered. Aman Resorts has transformed the former local hospital into the 20 room Amantaka, with rooms priced from $600-1,400 (in other words, for a bed for the night you can spend one or two years of per capita national income.) Another developer is turning the local prison into a similar quality luxury resort. We visit the site, and joke whether the new hotel will retain the former prison staff, or offer discounts to ex-convicts. But there are 400 workers toiling away on the site and it clearly will be a magnificent property.

Some of the hotels are former residences of Luang Prabang’s royalty, who lost their status and properties in the 1975 Revolution, to the future benefit of enterprising hoteliers. These include Maison Souvannaphoum, operated by Banyan Tree’s Angsana chain, the riverside Grand Hotel, and Villa Santi. All are done up nicely, but our personal favourite is La Residence Phou Vao (www.residencephouvao.com), a hillside hotel run by Orient Express, which combines lovely views, spacious gardens, and tasteful designs throughout. If only we could afford the $230-580 room rates.

An ample variety of restaurants and coffee shops have opened, and a few other tourism amenities are appearing, from a simple bowling alley to a high-end dinner theatre offering nightly cultural shows. The lengthy downtown night market ranks among Asia’s most pleasant. Luang Prabang’s first golf course is under construction, and the airport runway is being lengthened to accommodate jets instead of turbo-props. All this will only draw more numbers of tourists and add further upward pressure on hotel room rates.

It seems that Luang Prabang’s secret is out now, and its challenge will be to retain its appealing cultural identity in the midst of rapid demand growth. There is a risk of it becoming the victim of its own success, as high quality tourists don’t want to come this far only to see mobs of other tourists. Maybe like Bhutan, the government should impose an entry tax to keep the numbers down and the backwater charm intact. In the meantime we expect the hoteliers will quietly make a lot of money.

Picture of the Month: Timeless Luang Prabang, Photo by Douglas Clayton


This document does not constitute an offer to sell, or a solicitation of an offer to invest in Leopard Cambodia Fund LP, Leopard Cambodia Investments (BVI) Ltd., Leopard Sri Lanka Fund LP, Leopard Sri Lanka Private Equity Investment Fund, Leopard Sri Lanka Value Fund, and/or Leopard Sri Lanka Value Fund (non-US) (collectively, “our Funds”). We will not make such offer or solicitation prior to the delivery of a definitive offering memorandum and other materials relating to the matters herein. Before making an investment decision with respect to our Funds, we advise potential investors to read carefully the respective offering memorandum, the limited partnership agreement or operating agreement, and the related subscription documents, and to consult with their tax, legal, and financial advisors. We have compiled this information from sources we believe to be reliable, but we cannot guarantee its correctness. We present our opinions without warranty. Past performance is no guarantee of future results. © 2009 Leopard Capital LP. All rights reserved

In this Issue

Leopard Cambodia Fund Update

Portfolio Notes

In the Cambodia Press

Leopard Sri Lanka Update

Visit Notes

Picture of the Month

Quick Links

Leopard in the News: Media articles about Leopard’s funds, Cambodia is posted on our website; click here.

The Issue Price of Leopard Cambodia Investments (BVI) Ltd. was as of 31st December 2009 US$ 1’015.61 (30th November 2009 US$ 1’014.94)

Investing in our Sri Lanka Funds via a Self Invested Personal Pension Plan (SIPP):

UK taxpayers can invest in our Sri Lanka Funds via a SIPP and enjoy certain tax advantages.

Hornbuckle Mitchell is our SIPP provider:


Contact their Asia SIPP expert

Stephen Davis at:
[email protected]

Leopard Cambodia Fund, LP

Fund size:

USD 34,135,000





Valoren No:




Lipper ID:


Leopard Cambodia Investments (BVI) Ltd.

Fund size:

USD 20,610,000





Valoren No:




Lipper ID:



o ISIN Numbers:

Class A USD shares: KYG547641087

Class A EUR shares: KYG547641160

Class A CHF shares: KYG547641244

o Cusip Numbers:

Class A USD shares: G54764108

Class A EUR shares: G54764116

Class A CHF shares: G54764124

o Bloomberg:

Class A USD shares: LEOSLVU KY

Class A EUR shares: LEOSLVE KY

Class A CHF shares: LEOSLVC KY

o Lipper:

Class A USD shares: 65146184

Class A EUR shares: 68038834

Class A CHF shares: 68038835


o ISIN Numbers:

Class A1 USD shares: KYG547601065

Class A1 EUR shares: KYG547601149

Class A1 CHF shares: KYG547601222

o Cusip Numbers:

Class A1 USD shares: G54760106

Class A1 EUR shares: G54760114

Class A1 CHF shares: G54760122

o Bloomberg:

Class A1 USD shares: LEOVNSU KY

Class A1 EUR shares: LEOVNSE KY

Class A1 CHF shares: LEOVNSC KY

o Lipper:

Class A1 USD shares: 65146185

Class A1 EUR shares: 68038836

Class A1 CHF shares: 68038837