Newsletter Issue 22  –  June-August 2010 






Economy Continues to Improve 

Cambodia’s economy gained momentum in 2Q10, making us wonder if the consensus full year 4-5% GDP growth predictions might prove too cautious. Consider these 1H10 achievements over 1H09: trade +16%, tourist arrivals +12%, garments +10%, bank deposits +31%, bank loans +14%, microfinance loans: +25%, foreign exchange reserves +18% (to $2.9 billion). The only key sector still ill is real estate, as demand remains dormant despite a plunge in prices over the past two years. Nonetheless, construction continues on a few pre-crisis condo projects in Phnom Penh such as Korea-funded Gold Tower 42, which has reached its 27th floor now.

There are some hopeful signs for future FDI, mainly from Asia.  New foreign business registrations surged 42% in 1H10, led by investors from China, Vietnam and Korea. Vietnam officials said their businesses intend to invest $1.3 billion in Cambodia over the next two years in seven industries, including oil, power, mining, and rubber.  China’s cumulative investments in Cambodia have now reportedly reached $8 billion, making it by far the largest investor.  China has been the dominant infrastructure banker and contractor here, like in most frontier economies, and recent news suggests no change to that policy. China has just agreed to finance and construct the $26 million first phase of Phnom Penh’s second river port, which will triple the port’s capacity.  China’s Ex-Im Bank will also finance Huadian Power’s US$412mn, 338-MW hydropower project in Koh Kong province, which when completed in 2014 will nearly double Cambodia’s current generation capacity.





Leopard Cambodia Fund News

We are pleased with the performance of our portfolio companies this year.  It was also a nice surprise to see two of them featured recently in separate magazine cover stories. Here’s an update:


Local excitement is brewing as Kingdom Breweries prepares to launch its flagship "Clouded Leopard Pilsener" by October 1st. The brewing and bottling equipment are working well, and the riverview Tap Room looks grand. Brew-master Peter Haupenthal is still fine-tuning the final recipe but the beer’s trial batch has drawn positive comments from early tasters, such as AsiaLIFE Guide: "With a strong, crisp and slightly bitter aftertaste, Kingdom Pilsener is certainly in a different league from the regular lager. Perfect on a hot day, half a pint of the brew leaves a sense of having drunk real beer, not average dishwater."To review the full Cover Story, please click here." 


Nautisco Seafood successfully exported its first containers of frozen processed shrimp to customers in Japan and Korea who now want to sighnificantly increase the size of their orders. Global prices have risen since BP contaminated the shrimp-rich Gulf of Mexico. Management is busy making operational improvements to be able to meet the demand. Nautisco’s workforce has reached 330 and could double again within six months, delivering significant development impact to a region that certainly needs it. Click here to read Economics Today’s Cover Story on Nautisco.

1H10 earnings soared 71% Y-on-Y to US$ 9.43mn with 60% of this coming in the second quarter (for more details, please click here). Furthermore, July’s monthly result came in very strong, and management is aiming to deliver net profit for the full year of at least double 2009. We were pleased to learn that other foreign investors recently bought into ASA (the shareholding vehicle for our ACLEDA stake) at a premium to our purchase price. Lastly, ACLEDA’s application for a securities brokerage license was approved.


CamGSM, into which the Fund made its largest investment, continues to generate excess cashflow and to pay down its outstanding debt to the Fund earlier than contractually required. Its subscriber base grew 4% in 2Q10 to 2.8 million, lifting its market share to 38%. The upcoming planned launch of its proprietary mobile money transfer service may drive further growth. 


Angkor Residences Ltd. is the new official name of the entity formerly known as Cambo Fund Ltd. Its project to widen, pave, and put drainage alongside the public access road is now fully complete, making it much easier to approach and view the still-undeveloped site, especially in the current rainy season. Siem Reap’s residential property market remains in hibernation but at least its tourism arrivals climbed 26% in 1H09 over 1H08 which should eventually breathe life into that city’s economy. 


Greenside Holdings continues to make its monthly interest payments to the Fund.  


We are still awaiting official approvals for Cambodia Plantations’ targeted farmland concession. 





Annual Investor Meeting 


A record number of participants attended Leopard Cambodia Fund’s second annual Investors Meeting on May 28th at the Raffles Hotel Le Royal, Phnom Penh. LPs heard presentations from the investment team and from the CEOs of many of our investee companies. The day concluded with a guided tour of the Kingdom Breweries plant, followed by a Cambodian dinner. We look forward to an even larger turnout in May 2011.






Team News


Our Managing Partner, COO, and good friend Thomas Hugger has returned to his former job as Head of Portfolio Management at LGT Investment Management in Hong Kong. Fortunately Thomas remains a Consultant Partner of Leopard Capital, so we can continue to tap his experience and judgment from time to time. We thank Thomas for his diligent service and lasting contributions, and wish him the very best.


We are pleased to welcome as our incoming COO Michael Pritchett. Michael graduated from University of Virginia with degrees in Electrical Engineering and Economics, then marketed real estate in the US, developed alternative energy in Europe, and set up his own charcoal factory in Thailand.


We are fortunate to continue to attract high quality summer interns, the latest four being: Nora Maligmat, Who is pursuing a BS at university of Hawaii, Raisuddin Khan, a BBA student at the Hong Kong University of Science and Technology, David Frank, an MBA student from the University of Cologne, and Ussa Seang, who just completed his MBA from Cornell University. All have made useful contributions while learning about the private equity investment process and experiencing life in Phnom Penh.





Upcoming Conferences 


The autumn conference season is approaching, and our CEO Douglas Clayton will be speaking at the following events. LPs and potential future investors who wish to arrange a private meeting around the conference dates should email [email protected].


In London, Sept 16-17: Investing in Frontier Markets, Assessing Favourable Regions and products in a Diverse Market. Organizer: Marcus Evans Conferences. Location: Marriott Hotel Marble Arch, London. For more information on this conference, please click here


In Saigon, Oct 19-21: 2010 Southeast Asian Private Equity Conference, Maximizing Return through Southeast Asia Partnerships. Organizer: Thunderbird Graduate School of Management’s Global Private Equity Center. Location: Sheraton Hotel & Towers Ho Chi Minh City. For more information on this conference, please click here.


In Hong Kong, Nov 11-12: Annual AVCJ Forum: Asia’s Private Equity Week 2010: Organizer: Asian Venture Capital Journal. Location: Four Seasons Hotel, Hong Kong. For more information on this conference, please click here.





In the Cambodia Press 

  • The Cambodia Stock Exchange’s launch has been reset for July 2011 "at any cost".
  • Cambodia’s monthly minimum wage was raised by $5 to $61.
  • Capital Intelligence assigned Cambodia a B+ Credit rating.
  • Forbes ranked three unspoiled Cambodian beaches amongst "Asia’s Best Beaches".
  • The US and Cambodia completed their first ever joint military exercise.





Travel Notes:  Myanmar Revisited, by Douglas Clayton

Over dinner, one of our European investors tells me he’s building his retirement home in Myanmar, of all places.  "You should come see it", he says, and goes on to describe a housing estate so that sounds nothing like the Myanmar I remember. It doesn’t take much to convince me to join him there for a look.


I fell in love with Myanmar on my first visit there in the late 1980s – a simpler time when Yangon was called Rangoon, Myanmar was Burma, and mainland Asia was all an irrelevant frontier market to most foreign investors. Burma’s exotic countryside seemed like a living museum, a place to see how people lived before machines were made, when energy was delivered by hand and hoof.  Misty images linger of Inle Lake’s floating villages, the long rickety teakwood bridge near Mandalay, the storybook English cottages around Maymyo hill station, and the sight of hundreds of ancient pagodas stretching out under Bagan’s shimmering sunset.  On a few subsequent visits it felt like not much had changed in Myanmar, as if it was content to remain a spectator to the Asian Miracle unfolding around it.


It didn’t have to be this way. In the early 1990s Myanmar got off to a promising liberalization start, moving ahead of its neighbors in Indochina in some aspects. A former employer of mine even launched a Myanmar Fund in 1994, although this later proved to be ahead of its time.  Myanmar’s leaders winched back their half-open doors after watching more globalized ASEAN economies topple like dominoes behind the Thai Baht’s 1997 collapse.  At the same time the US banned investment in Myanmar by US nationals, in an emotional effort to force policy change in an already isolated country.  But long years of economic sanctions proved as ineffective in reorienting Myanmar’s leadership as they did in Cuba, North Korea, Zimbabwe, and Iran. Firmly in power since 1962, Myanmar’s ruling generals simply brushed off Western criticism and redirected their business opportunities to more pragmatic neighbors such as China and ASEAN. These countries – lately joined by India – have been delighted to acquire cheap natural resources and strategic infrastructure projects without competition from Western companies. Like a misguided missile, the sanctions missed their military target and landed on the poorest of the poor, by driving out the development agencies and labor-intensive factories which might have lifted millions out of poverty by now.  Myanmar’s people now get one-tenth as much development assistance per capita as Cambodia’s, although per capita income is much lower in Myanmar.


So with the liberalization program largely suspended, Myanmar’s economy has pursued an uneven development path, moving ahead with energy exporting projects that mostly supply its neighbors while standing still in many other areas. But some rays of hope are appearing. Myanmar’s military government has started its own process to introduce a Constitution-based democracy, using its own definition of the concept.  A national election will be held on November 7th, which optimists believe should bring some younger retired generals into power and set the stage for a resumption of economic reform and global engagement.

As a down payment on change, Myanmar announced in May a new "Visa on Arrival" policy for tourists.  For the tourism industry, this change is monumental. I decide to road-test the new policy on this trip, knowing that getting a visa from a Myanmar Embassy is time consuming at best. Bravo – the new visa policy really works, and what used to take five days now takes just five minutes at the airport.  Impressed, I walk out wondering what other local barriers to development could likewise be cleared overnight with a stroke of a pen.  If Myanmar could just bring its investment policies up to typical ASEAN standards, Yangon’s airport would be awash with eager investors. But today and most of my fellow travelers seem to be toting backpacks not briefcases.


On my taxi ride to my hotel, something feels odd about Yangon compared to the other Southeast Asia cities I regularly visit, and I try to figure it why. Of course the streets are much bumpier here, and the roadside looks greener but less trimmed. The traffic is lighter, and consists of obsolete Japanese sedans rather than those smart Lexus SUVs and occasional Hummers one sees in Phnom Penh. (I later learn that a 200% excise tax triples the cost of a car here.)  But then I realize the biggest difference is what is totally missing – the thousands of motorbikes that swarm the streets of Saigon and Bangkok. Someone tells me two-wheelers were banned from downtown Yangon after a VIP’s son suffered an unfortunate accident on one.  Or perhaps a General simply concluded this would simply make Yangon a more pleasant, orderly, and less polluted city; if so he was right about that.


Moving the masses and motorbike owners is a fleet of truck-busses, each hauling 15-20 passengers in the rear. Gone are the smoke-belching colonial-vintage British busses I saw on my first trip, absurdly overloaded with passengers, some clinging to the door and others perched up on the roof.  I’m sure the locals don’t miss those clunker busses, but they provided me some great photos back then.


One benefit of Yangon’s investment neglect is that it still contains magnificent examples of British imperial architecture.  I am relieved to find these glorious buildings still stand, yet many are vacant and ghostly now, as government officials have relocated to the mysterious new capital city of Naypyidaw 320km north.  The fate of these deteriorating buildings is unclear but a mass privatization of state properties is quietly underway, which one suspects might hasten their eventual demolition.


In our Facebook Age of global uniformity I am happy to see most of Yangon’s men and women are still wearing a longyi rather than western clothing. The Burmese appear to have maintained the traditional values that modernization tends to diminish, including basic honesty.  A resident expat tells me it is not uncommon to see someone climb on to a public bus carrying a large bundle of currency clearly visible in a plastic bag (kids, don’t try that back home.)  He says the Burmese are hard workers, also. Around one million have crossed the border to toil in Thailand’s factories and homes, where they have earned a reputation as cheerful, diligent, inexpensive, and un-militant. One of those million works in my own home and she certainly fits the description.

We stop for lunch at the historic Strand Hotel, where I stayed on my first visit. I still recall the dining room back then: the battered silver tea servers carefully polished, the dignified waiter in frayed white jacket presenting an elaborate menu of Victorian meals – only to advise that each dish I tried to order was "out of stock".  Eventually I got the message and ordered the plow buffalo curry that was the standard fare at all government-run hotels then. But today the Strand has been restored to its colonial-era splendor and we enjoy a meal fit for a Viceroy.


After lunch we cross the river to my friend’s "dream home" site, which turns out to be a splendid riverfront lot with a distant view of the iconic Shwedagon pagoda. A few dozen workers are carving out the driveway and reshaping the riverbank, using only hand tools. They smile shyly at us but keep on hoeing. The site is one of the finest lots in the Pun Hlaing Golf Estate, a self-contained residential community that contains Myanmar’s best international hospital, best international school campus, and best golf course – a Gary Player championship course that includes the country’s best spa, gym, and tennis courts. We drive electric cars over smooth roads lined with shade trees, lush landscaping, and flood-proof drainage, and there is even a special power connection to banish blackouts. Such amenities are unique in Myanmar, yet lot prices are cheap by Yangon standards and I make a mental note to book one the next time I win the lottery.


The Golf Estate is an unexpected oasis, but otherwise Myanmar feels a decade behind Cambodia, which itself feels a decade behind Vietnam, which feels two decades behind Thailand. For the adventurous investor, Myanmar is the Shangri-La, Asia’s frontier of frontiers.  Everyone knows that fortunes will be made here once the sanctions are lifted and the economy opens up, as Myanmar is a naturally rich country with a temporary governance problem. Some entrepreneurs who scored by entering Cambodia early are looking to replay their experience here, and I stop in to see what a few are doing.  One of the founders of the popular FCC restaurant in Phnom Penh has set up a beautiful pub called 50th Street, featuring live music – Yangon already has a thriving music scene compared to Phnom Penh.  We also stop in to visit the publisher of Myanmar Times, who also runs the leading daily in Cambodia.  His office is in a historic building that is nicely renovated and decorated with huge colorful abstract paintings by one of the many first-rate local artists here.  The spacious press room would make a great movie set, while heavy printing presses occupy the floor below, which smells of ink.  These days one rarely finds owners of old-fashioned newspapers who are still optimistic about their core business, but Myanmar travels in a different dimension and the Myanmar Times is bravely in expansion mode.


Over the course of my visit I encounter the usual frontier market inconveniences:  the country’s Internet service flickers on and off, my Gmail seems to be blocked, my Blackberry doesn’t work. My hosts describe some more serious surprises that await intrepid investors.  For example, the economy operates without a fully-functioning banking system. After a bank run in 2003 led to the closure of 20 commercial banks, the range of available banking services was sharply reduced and never fully restored.  As a result, commercial transactions may involve bags of cash, while surplus savings typically get deposited into property or cars as tangible stores of value.  As a result land in downtown Yangon is surprisingly expensive, bearing little relationship to the yields that owners can derive from it. 


The West has very low expectations about the upcoming elections but the view here on the ground seems more sanguine.  Certainly it seems to me that Myanmar can sink no lower but has huge upside once it decides to develop.  To comprehend Myanmar’s potential, look over the border at Thailand, a country of comparable size and population whose capital Burmese forces sacked and pillaged 243 years ago. Around the time of World War 2, colonial Burma’s economy and development surpassed Thailand’s, but over the last half century of independence Burma impoverished itself through socialist policies and military rule. Both countries still have armies that assign themselves an overarching political importance, but by holding frequent elections and welcoming foreign investment, Thailand has been able to build a GDP 10x larger than Myanmar’s. Thailand will continue to grow well above the world average but the gap between these historical peers seems likely to narrow as Myanmar introduces a political system more similar to Thailand’s.  Note that Myanmar has only just begun to tap into its dazzling endowment of natural resources (oil and gas, minerals, precious metals, gemstones, timber, seafood, etc.) or to develop the myriad processing industries these resources would support.  With the largest landmass in mainland Southeast Asia and large fertile river deltas, Myanmar also has the potential to become a major exporter of rice and other agricultural products.  Its 2,000km uninterrupted coastline on the strategic Indian Ocean offers deep water port sites, virgin beaches, and substantial fisheries potential not to mention 600 little-used tropical islands.  From my own wanderings in both countries, I would rate Myanmar’s long-term tourism potential just as strong as Thailand’s – which draws 14 million tourists a year versus Myanmar’s 300,000.

Obviously this country will be a fabulous place to invest, when the time is right.  I fly out resolved that Leopard Capital will be here when that time comes.







Picture of the Month:  Modern Myanmar, 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 Cam-Lao SME Fund LP, or any other funds sponsored by Leopard Capital LP or its affiliates (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. © 2010 Leopard Capital LP. All rights reserved


In this Issue

Economy Continues to Improve

Leopard Cambodia Fund News

Annual Investor Meeting

Team News

Upcoming Conferences

In the Cambodia Press

Travel Notes: Myanmar Revisited

Picture of the Month



Quick Links 



Leopard in the News: Media articles about Leopard’s funds are posted on our website, please click on the following links: Leopard Cambodia.




The NAV of Leopard Cambodia Investments (BVI) Ltd. was as of 31st March 2010 US$ 972.25 (31st December 2009 US$ 1’015.16)



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: