Private Equity

in

Emerging Frontiers

“It was the best of times, it was the worst of times,

it was the age of wisdom, it was the age of foolishness,

it was the epoch of belief, it was the epoch of incredulity,

it was the season of Light, it was the season of Darkness,

it was the spring of hope, it was the winter of despair,

we had everything before us, we had nothing before us,

we were all going direct to heaven, we were all going direct the other way…”

Charles Dickens, A Tale of Two Cities, 1859

CONTRARIAN

INVESTORS

IMPACT

INVESTORS

FRONTIER PRIVATE EQUITY

Financial Returns Social Returns

• BEHAVIORIAL FINANCE

• CHALLENGE THE CONSENSUS

• CYCLES; REVERSIONS TO THE MEAN

• DEEP VALUE NOT MOMENTUM

• AUSTRIAN ECONOMICS / LIBERTARIANISM

DR MARC FABER

Leopard Capital Chairman

JIM ROGERS

Leopard Capital Advisor

DR JIM WALKER

Leopard Capital Director

FRONTIER PRIVATE EQUITY

CHOOSING

FRONTIERS

Not all Frontiers are

“Emerging Frontiers”

Transitional:

• War

• Disaster

• Ideology

Poor

Unpopular

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Political Risk Index 2011 - Maplecroft

14

EIU’s Political Instability Index shows the level of threat posed to governments

by social protest, covering the period 2009/10.

Iraq 8.8

Cambodia 7.9

Afghanistan 7.5

Yemen 6.3

Bahrain 5.0

Libya 4.6

Syria 4.6

Tunisia 4.2

Egypt 3.8

Highest Risk = 10.0

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Southeast Asia: Caribbean: East Africa:

Cambodia Haiti Ethiopia

Laos Cuba Kenya

Vietnam Rwanda

Thailand South America: South Sudan

Myanmar Colombia

Venezuela West Africa

South Asia:

Bangladesh Central America: Central Africa

Sri Lanka Honduras

Nepal Nicaragua

Bhutan Belize

Red: Extreme Frontiers

FOUR SUNRISE

ECONOMIES

Region Country Pop. GDP Per Cap GDP Religion

(mn) (USDm) (PPP; USD, IMF) (primary)__

Southeast Asia Cambodia 14 11 2,286 Buddhist

South Asia Bangladesh 162 100 1,697 Moslem

Americas Haiti 10 7 1,241 Voodoo

Africa Ethiopia 85 30 1,092 Christian COMPARISON: USA 307 14,120 47,284

Tropic of Cancer

Equator

Cambodia Bangladesh Haiti Ethiopia

Region Glory Days Centuries Recent Source of Impoverishment

Cambodia Angkor 9-15th War, Marxism, Genocide, Governance

Bangladesh Pala 8-12th Governance

Haiti French Colony 18-19th Governance, Natural Disasters

Ethiopia Abyssinia 0–10th Marxism, Civil War, Governance

Invest here

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• Compact coastal country (Florida-sized)

bordering Thailand, Vietnam, Laos

• Mostly flat: farmland, forests, long

rivers, huge lake, 440km coast, seaport

• Low-density population, youthful

(14mn people, avg. age 21)

• Sufficient farmland, water, and labor

for major agri-business

• Untapped minerals, oil and gas

• Global tourism appeal anchored by

Angkor Wat World Heritage Site

• Land bridge links Vietnam and Thailand

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• World’s 7th largest population (162mn)

• Densely packed (imagine moving half of

USA’s population into Iowa)

• Fertile agricultural nation on the

low-lying Ganges Delta; flood prone

• Low-income, subsistence-based economy

moving up the value chain

• Vast pool of young, low-cost labor

• Opportunities in garments,

pharmaceuticals, and services

(IT services, health care, education etc)

• Awakening capital market

• Sovereign rating upgraded

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• Once a rich French colony; now the poorest country in American Hemisphere

• Ravaged by most damaging earthquake in modern history in January 2010

• Rugged landmass, the size of Massachusetts, scenic but 98% deforested

• 5 decades of bad governance; now the “NGO Republic”

• 90% of professionals have emigrated; large Diaspora and remittance inflow

• Hard working, trainable labor force (10mn population)

• USA allows duty free garment imports

from Haiti (HOPE Act)

• Proud, vibrant culture; tourism potential

• $5-10 billion of assistance pledged

• Private sector small, undercapitalized

• Exceptional opportunities to rebuild an

entire economy, with donor support

• Political stability uncertain

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• Africa’s second largest population (85m) after Nigeria; #14 in world

• Landmass the size of Texas + California, with varied terrain and climate

• Cradle of civilization, oldest human remains; among oldest independent

countries in world; never colonized; Christianized in 4th Century AD

• Marxist 1973-1991; now capitalist but state still owns all the land

• No foreign banks; telecoms monopoly

• Transport and power constraints

• Capital Addis Ababa: 3mn population

• 85% of the people are farmers

• Largest livestock herd in Africa

• Key exports: coffee, flowers, qat,

oilseeds, leather products, livestock

• Good tourism potential

Four countries with:

• 94% of USA’s population

• <1% of USA’s economy

• early in their cycles

• off the radar screen

Globalization winners:

• cheap labor

• food based economies

• untapped resources

• Duty Free exporters

GROWTH DRIVERS

IN COMMON

THEME 1:

POWERFUL

DEMOGRAPHICS

Source: United Nations Population Division, 2007

6 billion (3x) more people

in the developing world

during my expected lifetime

Source: US Census Bureau

Expanding Labor Forces and Domestic Consumption in the least developed world

Source: US Census Bureau

Shrinking Labor Forces and Consumption Ahead in Russia and China

Brazil and India

look fine

Source:

US Census Bureau

Source: World Bank

Source: World Bank

THEME 2:

BETTER

INFRASTRUCTURE

USA: Major Infrastructure Achievements 150 years

1811 - Oregon Trail

1869 - First Transcontinental Railroad

1935 - Hoover Dam

1937 - Golden Gate Bridge

1956-66 - Interstate Highway Program

Cambodia: Infrastructure Achievements 25 years (1995-2020)

- All national highways paved (2 lane)

- Trans-national railroad

- New bridges on all major river crossings

- Seaport expanded

- Several new major river ports

- Nationwide 3G and 4G phone service

- 5 hydro dams under construction

10x in

25 years

Half of America’s bridges are past their

intended lifespan. Budgets are being cut.

The Future of American Infrastructure The Future of Asian Infrastructure

Japan is donating and building

Cambodia’s largest bridge to

complete the Asian Highway

Source: World Bank

Telecoms Monopoly

Similar slope to US,

10 years behind

THEME 3:

UNBURDENED

Our new brewery in Cambodia faced no Government mandated:

• minimum wage

• health insurance

• social security

• handicap toilets

• sprinkler systems

• brewery license

• formulation standards

• health & safety warnings on labels

• recycling deposits on labels

• advertising prohibitions

• age and time restriction on beer sales to consumers

• different state laws to sell beer in different parts of Cambodia

• requirement to sell only to wholesalers

• Alcohol & Tobacco Tax & Trade Bureau (TTB)

• Federal Trade Commission (FTC)

• State Alcohol Beverage Control Boards

• etc.

THEME 4:

DEFENSIVE

AGRO-ECONOMIES

Sources: Food and Agriculture Organization of the United Nations, 2009; United Nations Population Division, 2006

Food Supply Falling:

• Urban Development

• Soil Degradation

• Droughts and water shortages

• Floods

• Diminishing returns from

“Green Revolution” inputs

Food Demand Rising:

• Increasing global population

• Developing world affordability

• Rising meat demand

• Biofuels demand

Source: World Bank

Cambodia Ethiopia

Bangladesh Haiti

HOW TO ENGAGE

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Read

Travel

Network

Relocate

50

Assume world is static

Watch CNN

Consult your financial advisor

Founded in 2007 to launch pioneering private equity funds in frontier markets

A partnership of 20 contrarians with decades of investment experience in developing countries, e.g.:

• Marc Faber voted one of the World’s Five Wisest Investors – Bloomberg

• Jim Walker voted Asia’s #1 Economist for 11 consecutive years –Asiamoney

• Paul Supramaniam founder of LawAsia and one of Singapore’s top M&A attorneys

• Gordian Gaeta former Managing Partner at Booz Allen Consulting - Asia

• Andrew Fraser former Group CEO of Baring Securities

• Henry Looser former Head of Private Banking at Bank Julius Baer

• Eric Wetlaufer former Chief Investment Officer of Fidelity Research & Management

• Terry Mahony Chairman of VinaCapital Group (largest Vietnam fund manager)

• Alexandre de Lesseps Director of BlueOrchard Finance (leading global microfinance fund)

• Anthony Moody Asia Chairman, Sindicatum Carbon Capital (environmental projects)

• Robert Keith Co-founder of Charles Street International (global investment firm)

Cayman-domiciled with offices in Hong Kong, Cambodia, Laos, Haiti, Bangladesh and Sri Lanka

Licensed and regulated by Hong Kong Securities & Futures Commission

Member of EMPEA and LAVCA, signatory of UNPRI Principles

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Write me at: dc@leopardcapital.com

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