Newsletter Issue 26  –  March 2012 




Economic Update


Cambodia’s 2011 economic growth outshined economists’ predictions, coming in at an estimated 6.8-7.0%. Most economists are cautiously projecting 6.0%-6.5% growth for 2012 (Leopard’s forecast is 7.0 %.) Consumer Price Inflation peaked in July at 7.1% then moderated to below 6%.

Agriculture was challenged by severe flooding in 3Q, yet rice production rose 2% to around 8.4 million tons of paddy. Yields increased from 2.6 to 2.9 tons per hectare in some provinces. Milled-rice exports also increased as new mills boosted industry capacity.


Garment exports rose by one-third to exceed $4 billion in 2011, propelling overall container port volumes up 31% in Phnom Penh and 7% in Sihanoukville. Cost pressures in China are expelling labor intensive industries to cheaper countries like Cambodia, which absorbed 50 new garment factories in 2011, lifting the total count to 552. Footwear is another industry making strides in Cambodia.


Tourist arrivals rose 14% to 2.85 million, of which 1.6 million visited Angkor Wat (+23% y-on-y). Vietnam, South Korea and China led the visitor rankings. More than a few tourists seem to enjoy testing their luck: the profits of NagaWorld, Phnom Penh’s only casino, doubled to a record US$ 98 million in 2011.


The construction industry has revived in Phnom Penh with a focus on the high end. The recently completed 22-story Phnom Penh Tower added Cambodia’s first Class A office space, while the 38-story Vattanac Capital Tower is rising daily in its quest to become the country’s tallest building. Across the river the 800 room Sokha Phnom Penh Hotel is under construction with a budget of $100 million. Hong Kong Land hopes to begin work on Cambodia’s first high-end shopping center by the end of this year. Outside the city, Sokha hotel group has rebuilt and reopened the long, winding road up Bokor Mountain on which it is constructing a large mountaintop casino resort. Sokha is building an even larger new hotel on the beach near Sihanoukville. Altogether the government approved some 2,000 new real estate projects in 2011 worth over $1.6 billion.


Infrastructure development continues as well. Phnom Penh recently opened its second intersection flyover, and workers are now expanding the Japanese bridge across the river, to be 4 lanes as they have done with the Monivong bridge on the southern end of the city. In Sihanoukville, the ribbon was cut on the completed bridge to Snake Island. Crews are working on the railroad, with some stretches now upgraded. Others are upgrading provincial roads and constructing hydropower dams. Thai investors have revived discussions to build a 1,800MW coal-fired power plant in Koh Kong, near the Thai border, now that border tensions between the two Kingdoms have eased.


Foreign Direct Investment rose 14% to $632 million in 2011, led by investors from China, Korea, Malaysia and Vietnam. Business registrations rose by over 20% to 3,090 in 2011, which included some notable projects. Cambodia welcomed its first high-tech manufacturing plant with the opening of Minebea’s US$60 million precision motor factory, heralding a greater level of Japanese industrial interest in Cambodia. Meanwhile, local investors financed and opened the new $60 million Khmer Brewery. Cambodia licensed its 34th commercial bank, leading to advice from the IMF that maybe that Cambodia’s free market policies are simply too free. China’s Xinwei was issued Cambodia’s tenth telecom license and announced plans to roll out a 4G network.


The Cambodia Stock Exchange is preparing to commence share trading end of March 2012 following the Initial Public Offering of Phnom Penh Water Supply which is now underway.


Regional Highlights: Myanmar


Following recent democratization measures, including the release of hundreds of political prisoners, cease-fire agreements with ethnic rebels, and the reintegration of dissident Aung San Suu Kyi into the political process, it is apparent Myanmar (Burma) is determined to rejoin the international community. After being isolated for decades, Myanmar is emerging as a priority target for multi-national corporations and investors as it is rich in natural resources and tourism appeal, and offers a sizeable inexpensive labor force and potential domestic market. These attributes, coupled with its strategic location between India, China and Southeast Asia, position Myanmar to become a high growth economy for decades. Leopard Capital is preparing to establish a significant presence in Yangon.   




Leopard Cambodia Fund Highlights      

Leopard Cambodia Fund ("LCF") has now been fully drawn down and will be fully committed pending the completion of several transactions currently in execution. Thus far the Fund has achieved one full exit and one partial exit. The realized investments achieved a blended gross IRR of 37%.  



ACLEDA reported exceptional financial results for the full year 2011. The Bank’s loan growth of 35% increased its loan portfolio to over $1 billion, with less than 0.6% non-performing loans. Earnings surged 66% year-on-year to $44 million representing a return on equity of 28%. Growth prospects remain abundant as Cambodia’s domestic credit provided by the banking sector is still only 23% of GDP compared with 136% for its more developed neighbors. ACLEDA’s Laos operations are now profitable and the in the future the Company may expand further into Myanmar once political dynamics are deemed favorable. ACLEDA completed a 12.8% capital increase via a rights offering in early January 2012 that was fully subscribed by existing shareholders. LCF subscribed to its pro-rata portion, increasing the size of LCF investment by approximately US $135,000.


Intean Poalroath Rongroeurng ("IPR")                                   

In FY 2011, IPR performed well with loan growth of 31% to US$4.6 million. Heavy flooding in Cambodia only marginally impacted IPR’s rural clients. The collection rate remained high resulting in a low portfolio at risk over thirty days (PAR>30) of 0.94%. In December 2011 LCF provided IPR with an additional $500,000 in the form of a convertible loan. The proceeds from the loan will be used to support loan growth, as demand for agriculture loans remains robust.


Kingdom Breweries

In late November, Kingdom launched its first canned beer, Kingdom Gold Lager, bringing quality Kingdom beer to the local mid-market. The successful launch has pushed Kingdom to record volume levels, and Kingdom’s products are now available nationwide. Kingdom welcomes as its new Chief Executive Mr. "Tak" Achiravas Vanasrisawasd who has prior beer industry managerial experience in Thailand. With new leadership, more products, and an expanded distribution footprint, Kingdom is positioned for growth in Cambodia. Kingdom’s award-winning Clouded Leopard Pilsener has been exported and sold in Australia, France, Hong Kong, Thailand and the UK. Write to Kiri [email protected] to find out where to buy Kingdom Beer in these countries. The Kingdom double decker bus has been fitted out and will soon be cruising the streets of Phnom Penh bringing visitors to Kingdom’s brewery Tap Room to taste the Best Beers in the Kingdom.   


Nautisco HK

LCF through its portfolio company Nautisco HK owns 34.6 % of Nautisco Seafood Manufacturing ("NSM"). NSM has suspended operations following a period of underperformance and the shareholders have been unable to agree on a restructuring/recovery plan. The disagreement is being addressed through appropriate channels.  LCF is committed to a fair resolution and to developing the seafood processing business in Cambodia. In the interim, Nautisco HK has started a new seafood factory in a leased modern factory in Sihanoukvillle. The new venture is led by Leonard Minster, a 25-year seafood processing industry veteran who previously managed Kitchen of the Ocean’s factory in Ranong, Thailand for 15 years. The new venture expects to commence production within a few months.   


Electricite Du Laos Generating Co. ("EDL"):

In 4Q, hydro-power company EDL paid an interim dividend, providing a yield of 4.1% on LCF’s purchase price. The Company is expected to make a second dividend payment in the first half of 2012 with an expected yield of 6-7%, providing LCF with a dividend yield in excess of 10% for 2011. Analysts expect EDL’s earnings in 2012 to rise 23% year-on-year and EBITDA to nearly double as the expansion of one large plant comes on line and as newly acquired plants are consolidated into earnings. Currently EDL has a market capitalization of $467 million and trades at 5.5x 2012 expected earnings and a forecasted dividend yield of approximately 11%.




Leopard Capital News 

New Executive    

We welcome a new Associate Partner to Leopard Capital’s full time team in Phnom Penh to strengthen our value addition capabilities for our portfolio companies.  Brian Erskine has 15 years of operational, investment, and consulting experience in North America, Europe, and Asia. In Asia, his background covers the transportation, retail, manufacturing, aviation, education, and agriculture spaces. His overall experience encompasses risk management, asset management, strategy, business development, and corporate finance, spanning multiple industries and companies including Mercer Management Consulting, General Electric, Downtown Associates, PPG Industries, Masan Group, and Vietnam Investments Group. He earned an MBA in finance from the Wharton School at the University of Pennsylvania and an AB with honors from Harvard University, and holds the Investment Management Certificate from the CFA Society of the UK and the Treasury Management Certificate from the Tepper School at Carnegie Mellon University. Brian is fluent in French and conversational in Vietnamese.

Frontier Public Equities

Leopard Capital has created a new group subsidiary, Leopard Capital Management Ltd., which will specialize in public equities in Asian frontier markets. Qualified investors may request info at:

[email protected].


Emerging Frontiers Blog

Please visit our new blog covering investment, business and economic news in the emerging frontier markets we like most.


Annual Meeting and Myanmar Trip

Limited Partners and probable future investors are invited to attend the Leopard Cambodia Fund 2012 Annual Investors Meeting on May 25th at the Raffles Le Royal Hotel, Phnom Penh. The General Partner will meet on May 24th.  We will also organize an optional side trip to Yangon, Myanmar (Burma) from May 21st  to 22nd, 2012. 

To obtain more details and secure your spot please write to Marina, [email protected]




Secondary Market

Leopard Capital attempts to match buyers and sellers of LCF commitments and shares of LCF’s "feeder fund", Leopard Cambodia Investments (BVI) Ltd.  Potential buyers and sellers should email Mohamed Ahamed at

[email protected].



Swiss Account

Need a Swiss bank account or asset management services? Our trusted partner in Zurich can assist. Please write to Thomas Hugger

([email protected]) for more info.



Travelogue: "Mondulkiri – The Road Less Traveled", by Michael Hodgson   


Most visitors to Cambodia will tour the riverfront capital, Phnom Penh, and become familiar with Siem Reap’s lively hot spots on Pub Street after exploring the ancient monuments of Angkor. Few however find their way into Cambodia’s remote provinces such as Mondulkiri. One of my Cambodian colleagues at Leopard inspired me to make the 8 hour journey from Phnom Penh.


Mondulkiri Province abuts the Vietnamese border in Cambodia’s Northeast. Although it is physically Cambodia’s largest province, it is also the most sparsely populated with only three inhabitants per square kilometer. Little is known about Mondulkiri’s history prior to French colonization in 1864 which led to the first dirt road being hacked through the malaria-plagued jungle to the provincial capital, Sen Monorom. The province’s tribal inhabitants earned a fearsome reputation and a posting to the province was probably the last thing a colonial administrator would have wished for. Later, during America’s Vietnam War, the Ho Chi Minh Trail ran though Mondulkiri and its unfortunate natives, who had nothing to do with that, were carpet bombed. Until a decade ago Mondulkiri was the last bastion of an ethnic minority guerilla group, FULRO – the United Front for the Liberation of Oppressed Races – which fought against outsiders of all ideologies.


It was only recently that the 127 km final section of the road to Mondulkiri’s capital was paved, courtesy of a soft loan and construction crew from China. As a result of its former isolation, the province remains steeped in the past with over 80 percent of the population belonging to one of the ten tribal minorities. Whilst some of the hill tribesmen have taken jobs in the capital "city" or smaller towns along the road, the majority have remained in close proximity to their place of birth. Due to their animist beliefs, these tribesmen retain a spiritual connection to the land and subsist in the traditional manner of their ancestors, gathering fruit and wild honey, hunting game in the forests, and carrying out slash and burn agriculture techniques closer to home. Few are literate or can speak Khmer, increasing their isolation.


While the region’s hilly terrain does not lend itself to large-scale rice production, it is well-suited for growing rubber, cassava, coffee beans and cashew nuts. Cassava has of late been a success story in Cambodia with many farmers turning to the crop from less lucrative ones. Rubber is also attracting attention particularly from Vietnamese and other foreign investors. Cambodia currently has 100,000 hectares of mainly small, family-run rubber plantations with an additional 60,000 hectares of larger scale plantations under cultivation. The government’s goal is to increase that figure to 300,000 hectares by 2020. With its rich red soil and relatively few people to relocate, Mondulkiri is attracting rubber investors. The French/Khmer Socfin KCD venture was awarded one such concession but encountered resistance from the local Phnong tribe which held a traditional ceremony to curse the company and make it "vanish like a dead pig." The curse does not seem to have had the desired effect, as the project continues.


Apart from such cash crops, the province produces a variety of agricultural products for domestic consumption such as bananas, sweet potatoes, and (rather surprisingly) strawberries and avocados. Some of these could potentially be expanded into larger commercial production. Due to its elevation Mondulkiri enjoys a cooler climate than most of Cambodia, somewhat akin to Vietnam’s Dalat which produces specialty crops while serving as a domestic tourism mecca. Mondulkiri’s pleasant climate, rolling hills, thick forests and gushing waterfalls render it a suitable destination for eco- and adventure tourism. Its proximity to Vietnam has spawned casinos near a newly opened border crossing. The road to those casinos is currently under construction and skirts past lonely hill-tribe villages and along magnificent stands of bamboo.


Mining exploration is a burgeoning industry. The Chinese mining company Zhong Xin Industrial Investment is currently excavating three mines as deep as 500 meters in the Memang Gold Mines Area. Vietnam’s Vinacomin is exploring for bauxite in Mondulkiri, after BHP Billiton and Mitsubishi withdrew from the Province. The Australian group Oz Minerals recently sold its gold deposit claims in Mondulkiri to Renaissance Minerals for $17.8 million. ASX- listed Brighton Mining has reportedly acquired gold properties in Mondulkiri, and Liberty Mining is believed to hold claims; the list goes on.


At risk from Mondulkiri’s ability to deliver agricultural produce and minerals is its important role as a wildlife habitat. In 2002, the government designated 400,000 hectares as part of the Mondulkiri Protected Forest (MPF). The area is home to a small number of tigers, clouded leopards, the rare fishing cat and the kouprey. Other fauna include the critically endangered Siamese crocodile, which is found in tributaries of the Srepok River within the MPF, the Irrawaddy Dolphin, and the world’s largest remaining population of black-shanked douc, an endangered monkey.


Slightly easier to spot are Mondulkiri’s elephants. Cambodia is home to over 600 wild elephants and 100 domestic elephants, half of which call Mondulkiri home. For those interested in owning their own pachyderm, the average cost of a domestic elephant is US$13,000, with some younger elephants fetching up to three times that amount. The Elephant Valley Project (www.elephantvalleyproject.org) is an elephant sanctuary on the outskirts of Sen Monorom that was established several years ago by a young Englishman, Jack Highwood. The purpose of the sanctuary is to provide veterinarian treatment and care to a small herd of sick and mistreated elephants. The sanctuary has recently acquired a new addition, Ruby.


Jack regaled a group of us one evening, against a soundtrack of barking deer calling in the valley below, with a curious tale of how the global economic crisis had affected elephants in neighboring Thailand. Thai law allows mortgages over certain types of movable as well as immovable property. Included within the movable category are elephants. Some Thai logging camps near Chiang Mai were so completely indebted to their lenders that when the banks came to foreclose on their assets, they ended up owning herds of elephants. The banks sought to offload the elephants as a "job lot" and Jack was interested in buying them and establishing a similar center in Thailand. But before he could raise the funds, the lot went to a local tycoon who apparently fancied owning his own herd of elephants.


Along the long journey from Mondulkiri back to Phnom Penh, I absorbed the rich biodiversity, the poverty and the economic opportunity the province has to offer, and was left with a sense of cautious optimism. Economic development is sweeping through Cambodia and will continue to spill over into this province. Investing in Mondulkiri, particularly in its agribusiness, eco-tourism and mineral extraction, will deliver needed employment opportunities along with improved social and physical infrastructure. However the related demand for land could reduce Mondulkiri’s natural forest cover and deplete its endangered wildlife, while eroding the traditional culture of the ten hill tribes. Clearly a balance must be found. Early investors will have the unique opportunity to establish responsible investment precedents that both preserve and provide resources to Mondulkiri Province.




Picture of the Month: Elephant Valley Project

Bath Time 





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 Cambodia-Laos Fund II 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. © Leopard Capital LP. All rights reserved.

In this Issue

Economic Update

Leopard Cambodia Fund Highlights

Leopard Capital News

Secondary Market

Swiss Account


Picture of the Month




Quick Links 



The NAV of Leopard Cambodia Investments (BVI) Ltd. was US$ 991.74 as of 30th September 2011


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: