Leopard Capital winds down Cambodia fund

The Cambodia-based firm will continue to manage out the existing Cambodian portfolio companies, as well as its Haiti fund.

Frontier markets firm Leopard Capital is winding down its $34 million Leopard Cambodia Fund and is looking for exits as the fund expires in April 2016, Leopard founder and chief executive officer Douglas Clayton told Private Equity International. It has no plans to raise a successor vehicle.

“Leopard Cambodia Fund has had six realisations and is working on some more,” Clayton said. “We may extend a few of our holdings an extra year or two, such as Acleda Bank and Tangent Foods.”

Leopard’s Cambodia Fund launched in 2008 targeting $100 million but raised $34 million, according to PEI Research & Analytics.

It has made a total of 14 investments in Cambodia, Laos and Thailand including Thai agriculture business Engage Resources, Phnom Penh beermaker Kingdom Breweries, rural power transmission and distribution system Greenside Holdings, hydropower company EDL Generation, microfinance institution Intean Poalroath Rongreurng and mineral water company Kulara Water.

In 2012, the firm partially exited its investment in electricity company EDL through an initial public offering on the Lao Securities Exchange and reaped and internal rate of return of 44 percent, as previously reported by PEI.

Clayton added: “Our investment thesis eight years ago was that Cambodia would outgrow its turbulent past and take its rightful place in the region, and that this would generate interesting investment opportunities. That’s been proven out, and is getting another boost from the launch of the Association of Southeast Asian Nations (ASEAN) Economic Community. There’s every indication that Cambodia will continue to transform from a frontier market into a stable, middle income country, with 7-8 percent annual GDP growth.”

“Cambodia is attracting a lot of strategic investors, but we’re still not seeing many regional PE funds coming here to look for opportunities. That reflects that it's still a small economy, with a limited number of local companies that would match the selection criteria for PE funds.”

He also noted that one of the biggest challenges for investors is finding quality management teams for portfolio companies. “At Leopard we choose to invest in small countries with a troubled a history, which usually means they have a small pool of managerial talent to draw from. This makes building successful companies more challenging.”

The firm has sought to raise other country-specific funds that were not able to reach a close. Its Myanmar fund launched in 2013 targeting $100 million, its Bangladesh vehicle launched in 2012 targeting $100 million, and its Bhutan fund launched in 2012 targeting $20 million, according to PEI Research & Analytics.

The firm is continuing to make investments in Haiti through Leopard Haiti Fund launched in 2012 with commitments from the International Finance Corporation, the Inter-American Development Bank (IDB)'s Multilateral Investment Fund and the Netherlands Development Finance Company (FMO).

“Our Haiti fund still has two more years left in its investment period. We have done three investments so far, in pay television service NUtv, water kiosk chain DloHaiti and building materials manufacturer Veerhouse Voda, and are about to close a few more. We are looking at import substitution plays like plastic bottles, toilet paper, and paint manufacturing, as well as solar products and hotels” Clayton told PEI.

“Haiti's political environment has become less stable over the past year – they had a real challenge trying to elect a new president. Despite that backdrop, the bottom-up opportunities remain attractive and we are still bullish on the return prospects in Haiti.”

In 2013, the firm spun out its listed equities fund, Asia Frontier Capital, to concentrate solely on private investments from its Cambodia and Haiti Funds, as previously reported by PEI.