Leopard divests public market fund

The frontier markets firm has spun out its listed equities fund in an effort to concentrate solely on private investments as it gears up to raise its second Asia-focused vehicle.

Leopard Capital Management, the public markets arm of Leopard Capital, has completed a management buyout of the firm's listed equities fund, according to a company statement.

Led by former Leopard managing partner Thomas Hugger, the entity will be renamed Asia Frontier Capital and will invest exclusively in public equities in Asia’s frontier markets. 

The move marks a strategy shift for Leopard Capital as it refocuses efforts on its two private equity vehicles Leopard Cambodia Fund and Leopard Haiti Fund, Douglas Clayton, founder and chief executive of Leopard Capital, told Private Equity International. 

“The public equity [side] needed a presence in Hong Kong and the private equity side didn’t need that. To align the costs with the product better and to incentivise the managers better, we felt this would make more sense.”

“If our group was all based in Hong Kong then it would make more sense, but in our case we had to run a whole parallel infrastructure with licensing so it wasn’t really synergistic with private equity from a cost viewpoint. We like to put our private equity guys in the investment countries rather than sitting in a financial centre.”

The firm is also preparing a successor vehicle to its Cambodia fund, which is expected to launch in March 2014. The new fund will target $150 million and focus on cross-border opportunities in Cambodia, Thailand, Laos and a new geography for

The public equity [side] needed a presence in Hong Kong and the private equity side didn’t need that. To align the costs with the product better and to incentivise the managers better, we felt this would make more sense. 

Douglas Clayton, founder, Leopard Capital

the firm, Myanmar, Clayton said. 

“[The new fund] is requiring more of our senior management and is really going to be our flagship fund so we really wanted to put all of our effort into that,” he explained. Leopard will begin pre-marketing in September this year. 

Leopard Cambodia Fund I, a $34 million vehicle, is almost fully invested and will start distributing money to investors in January 2014, he said.

The fund has had one full exit and two partial exits, which Clayton said has brought the fund out of its j-curve. He believes a number of LPs from the fund will re-up for the second vehicle. 

Leopard will still share some information, research and back office functions with Asia Frontier Capital, which is based in Hong Kong. The firm has taken all of Leopard's public equities team and will hire more employees in due course. 

“The [AFC Asia Frontier Fund] has shown an impressive performance due to the underlying economic growth dynamics in [the fund's] country universe. Going forward, we expect that rising incomes and favourable demographics in these markets will continue to present opportunities in key industries across our country universe,” said Hugger, chief executive of AFC Asia Frontier Fund, said in the statement.