Interviewed by Tracy R. Thomas II


An Interview with Douglas Clayton, CEO, Leopard Capital

Q. What effect will the launch of Cambodia’s Stock Market (projected for July 2011) have on Leopard Capital, its current investments, future investments, and investment harvesting?

We are looking forward to listing some of our portfolio companies on the Cambodia Stock Exchange and hopefully exiting through the market. One of our investment themes is to buy up tomorrow’s blue chips across the basic sectors of the economy and groom them to go public. Fledgling markets tend to be volatile, and patient sellers can take advantage of periods of irrational exuberance to enhance their returns.

Q. What make Cambodia and Laos attractive areas of investment for Leopard?

There are few emerging markets in the world as open to foreign investment as Cambodia and Laos. If you believe in free markets, light regulation, and low taxes, you have to believe these economies will outperform over time. Then you toss in all the natural resources, youthful population, proximity to the global growth centers of China, India, Vietnam and ASEAN, and political stability - the story only gets better. Lastly, we are early movers here and get to enter at cheap valuations.

Q. What are the local barriers to investing?

In an economy this underdeveloped you have to be willing to enter companies at an early stage, sometimes even in the seed round, and get involved in all sorts of micro decision-making. Unusual operational challenges arise, but that is part of the fun. We call it Frontier Equity: a combination of private equity, venture capital, and entrepreneurship.

Q. How is your second fund different from your first? How is the market in Cambodia and Laos different post-recession?

Our first fund focused only on Cambodia and was quite opportunistic. Our second fund will include cover both Cambodia and Laos, and will focus more on funding small and medium enterprises (SMEs). 

Cambodia and Laos both maintained a healthy banking sector so rebounded quite quickly from the global financial crisis. There is less foreign speculation now which is probably a good thing for the economy and for long term investors like us.

Q. How important is managerial selection in the region? Is there a burgeoning entrepreneurial spirit?

In Cambodia the entrepreneurial class is unusually young, reflecting the demographic mix and the tragic history of this country three decades ago. A lot of them are bicultural, having spent a period of their lives abroad, and are thus quite easy to work with. Since their business experience and financial capital are limited most find the prospect of partnering with foreign investors appealing.

Q. Which industries represent the greatest opportunities?

We have focused on really basic industries like financial services, utilities, and food production. We like to build local brands and to bring goods, services and jobs to rural areas, where 80% of the people live and penetration rates are extremely low. This is like investing in rural America 150 years ago.

About the Interviewee

Douglas Clayton

DOUGLAS CLAYTON
Founder & CEO, Leopard Capital

Douglas Clayton founded Leopard Capital in 2007 to invest in Asian frontier markets. Its first fund, the $34 million Leopard Cambodia Fund, has made seven private equity investments. The Group’s next projects include Leopard Cam-Lao SME Fund, Leopard Sri Lanka Fund, and Leopard Bangladesh Fund.

Mr. Clayton has 25 years’ experience in emerging markets investments, primarily in Asia.  Previously he held senior executive positions at CLSA Asia-Pacific Markets, Indosuez WI Carr Securities, and Abacus Equity Partners. Mr. Clayton holds a Master of Management from Thailand’s Chulalongkorn University, and a Bachelor of Arts from Cornell University.