6th Asia Economic Forum

January 20-21, 2010

INVESTING IN PEACE

The Leopard Footprint

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Southeast AsiaCambodia • Laos• Myanmar

South AsiaSri Lanka • Bangladesh • Nepal

Central Asia• Kyrgyzstan• Uzbekistan• Tajikistan• Mongolia

Admin Office Hong Kong

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Global Investment Themes

Evolution of Global Investment Themes:

1.“EMERGING MARKETS” – IFC

2. “BRICs” –Goldman Sachs

3. “PEACE” -Leopard Capital

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Executive Summary

•Private Sector capital is the most useful source of development capital

•Pre-Emerging And post-Conflict Economies (PEACE) offer the world’s best investment opportunities

• Asia has many PEACE opportunities

• Large companies are usually too bureaucratic and slow to respond early to PEACE

• Entrepreneurs and small private equity funds can fill the gap

•Don’t rely on media, NGOs, or politicians for useful investment information about PEACE countries:see for yourself

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What is a Pre-Emerging Economy?

• Low per-capita GDP

• Domestic-driven economy

• Low levels of debt

Examples:•Cambodia•Laos•Myanmar•Bangladesh•Kyrgyzstan•etc.

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Developing Asia Comparison

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2008 GDP Per Capita (PPP basis), in US$ Source: World Bank

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Domestic Driven Economy

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Debt Burden

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Post-Conflict Economies

“Post-Conflict” Economy: a devastating war, insurgency, or terrorism campaign has been ended through either a negotiated settlement or a decisive military victory

Examples:

• Northern Ireland – negotiated settlement• Cambodia – negotiated settlement, then final military event 4 years later• East Timor• Nepal• Sri Lanka – military victory (2009)

Note: Post-Conflict Economies may also be Pre-Emerging Economies Examples:

• Cambodia • Nepal• East Timor

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Why Invest in Peace Economies

• Undiscovered = Underpriced

• Breadth of Opportunities

• Scale of Opportunities

• Least competition

• Most open economies

• Natural Resilience

• Basic products – agriculture, resources etc.

• Youthful – countries of the future

• Able to significantly reform

• World wants to help: Infrastructure, trade benefits etc.

• Economic Development helps lock in the Peace !

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INTRODUCING SRI LANKA

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Meet Sri Lanka

Asia’s NextEmerging Market

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Population 20 mn

Literacy Rate 92%

Urbanization Rate 15%

Land Mass (sq. Km) 65,610

GDP (USD Billion) 42

GDP per Capita (USD) 2.014

GDP Per Capita (PPP, USD) 4,581

Avg GDP Growth Rate (5Yrs) 6.4%

Fitch Sovereign Rating: B+/Stable

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Why Sri Lanka?

The ResplendentIsle

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• Stable democratic government

• Solid legal framework (ex-British colony)

• South Asia’s most open economy (since 1977); private sector driven (85% of GDP) and non-monopolistic

• Modern and efficient corporate sector (services, etc.)

• Literate, skilled labor force; high labor standards (ILO)

• English fluency common in urban areas

• Very talented Diaspora (1-2 million) includes skilled doctors, lawyers, accountants, engineers, etc.

• Spectacular tourism destination (culture, beach, eco)

• Trans-shipment hub for India; expanding ports

• Specialty agricultural exporter (tea, rubber, spices etc.)

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South Asia - Human Capital

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% ADULT LITERACY RATE Source: UNDP, 2009

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Upwardly Mobile Population

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RISING GDP PER CAPITA FALLING POVERTY RATE

Note: Population growth rate is under 1.0%

Sri Lanka’s Peace Dividend

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• GDP growth rate accelerating (7% in 2010)

• Foreign reserves surging ($5.2bn)

• Fiscal deficit falling (defense was 18% 2008 GDP)

• Interest rates and inflation collapsed

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Foreign Stimulus

Some Recent Support Pledges (incomplete list)

Multi-Lateral USDmn Sample ProjectsIMF 2,600 Standby facility for Balance of Payments supportADB 800 Colombo port, water, wastewater, power, roads, finance World Bank 200 Roads (N-E), resettlement EU 40 Resettlement

Bilateral China 850 Hambantota port/airport, Norochcholai coal power, railroadIndia 700 Railroad , Import finance, hospitalLibya* 500 Hambantota Airport (?), N-E infrastructureIran* 450 Refinery upgrade, Uma Ova hydropower/irrigation, oilJapan 400 Expressways, water supply, Galle portDenmark 155 Oluvil Port; water treatment

*uncertain

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North-East Economic Potential

North and East: as % of SL’s Total

• Population: 14%• Landmass: 20%• Agricultural land: 9%• Land suitable for rice: 40%• Coastline: 60%• GDP contribution (2008 8%

• Tricomalee: one of world’s best harbors• Arugam Bay: world-class surfing Mecca• 43 islands in N-E (19 clustered west of Jaffna)• East: granary of ancient Sri Lanka; 32 rivers flow to the sea. Also Sri Lanka’s best beaches.

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Reintegration Adds: - Markets - Land - Labor - Oceans

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A Global Trans-shipment Hub

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Two Sri Lanka Funds

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Leopard Sri Lanka Fund LP

Private Equity Closed-Ended $100million

Leopard Sri Lanka Value Fund

Listed Equities Open-Ended $ 30 million

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CASE STUDY:CAMBODIA

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Cambodia’s Post-Conflict GDP Growth

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Key Indicators

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LEOPARD CAMBODIA FUND

Update

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Leopard Cambodia Fund’s Investors

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Institutional investors:$11,750,000

Total: $34,135,000

Individuals: $21,635,000

GP: $750,000

Varma Mutual Pension

Insurance: $10,000,000

Other institutions

(AGIFEL etc): $1,750,000

Leopard Cambodia Fund

Investment Pipeline

Building a portfolio of basic industries

Agri-businessRice plantation• Rice mill

Agri-businessRice plantation• Rice mill

Infrastructure Rural power transmission• Renewable Power Plant

Infrastructure Rural power transmission• Renewable Power Plant

Technology Mobile operator• WiMax broadband

Technology Mobile operator• WiMax broadband

Production Beer brewery• Mineral water bottler• Shrimp processing plant

Production Beer brewery• Mineral water bottler• Shrimp processing plant

Property Residential condominium• Amusement Park• Hotel

Property Residential condominium• Amusement Park• Hotel

Financial services• Bank• Micro-finance Institution

Financial services• Bank• Micro-finance Institution

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Initial commitment has been made

Investments Committed

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Rice Production: Cambodia Plantations•Investing up to $4 million to develop a rice plantation

•Leasing approx. 3,000ha land via 70-year government concession

•2,000ha for cultivation, 1,000ha for internal water reservoir

•Internal irrigation enables dry season rice; 4 month cycle

•Fertile floodplain site:  target 7 tons rice/ha (national avg:  2.6 tons)

•Experienced local farmer will manage execution

•Land lease cost is very low by regional standards

•Highly cash generative business; robust returns expected

Status:

•Third party tests confirmed soil quality

•Land lease acquisition underway; completion target 1Q10

•Site works and planting in 2010; first harvest in 2011

•Exit to global agricultural fund or strategic investor, or via IPOLeopard Cambodia Fund

Investments Committed

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Beer Production: Kingdom Breweries•Invested $2.0 million for 55.5% of a boutique brewery venture •Create a high quality beer for tourists, expats, and affluent locals•Export to niche markets•Phnom Penh based brewery will offer tours and tasting •Possibilities to expand into contract production, and to add complementary products, e.g. carbonated beverages •Management team led by a Chairman/Senior Advisor (52yrs of brewery experience at Carlsberg etc.), an international CEO, and an award-winnning German brewmaster skilled at creating new beers

Status:•Renovating a leased former Nestle factory •Ordered new brewing line from Slovakia and bottling line from Italy •Hired the leading local branding/marketing agency (Bates121)•Target is to be bottling by July 2010 •Exit by trade sale or IPO

Leopard Cambodia Fund

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Power Transmission: Greenside Holdings•Invested US$1.3 million in a secured equity financing providing a fixed 20% p.a. return•Greenside holds 45% of GTS Transmission (GTST) which built and leased to Electricité du Cambodge (EDC) a US$4.25 million power grid in Kampong Cham province•EDC pays GTST a fixed $1.05 million p.a. for 25 years •GTST’s dividends to its 45% shareholder GTST provides ample state-originated cash flow to pay required $260,000 p.a. profit share payment to Leopard Cambodia Fund•Loan secured by Greenside’s share pledge of 45% of GTST, dividend pledge, and personal guarantee of Greenside owner

•GTST renovated and expanded a 120 kilometer system of medium and low voltage networks, bringing grid power to 7,700 households and 375 new commercial and industrial customers

Status:

• Monthly loan payments have been received on time

• Loan is due in Dec 2015, with put option to recall earlier

Leopard Cambodia Fund

Investments Committed

Investments in Pipeline

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Microfinance Institution•Investing $1.5 million for minority stake in an existing Microfinance Institution

•Provincial branch network

•Historical ROE of 25-30% with interest rate spreads of over 20%

•Healthy capital adequacy ratio and high quality loan portfolio

•Low entry valuation provides potential rerating upside.

Status:

•Term Sheet signed; transaction closing expected in Q1 2010

•Funds will be used to provide new loans

•Exit by trade sale or IPO

Leopard Cambodia Fund,

Investments in Pipeline

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Seafood Processing Plant: •Investing up to $2 million for a minority stake in Cambodia’s largest and most modern seafood processor

•Production commenced September 2009 with capacity of 10 tonnes raw material/day; will scale up to 30-40 tonnes in 2012

•Purchases wild-caught shrimp from Cambodian fishermen (70%); imports needed balance (30%) from suppliers in Vietnam and Thailand

•Customer targets: short term: Cambodia, Korea, medium term: Japan, Russia; long-term: Europe , North America

•Labour intensive industry suitable for unskilled Cambodia workforce

•As only a small producer Cambodia is unlikely to receive western anti-dumping penalties that affect Thailand and Vietnam processors

•Other businesses may now start to develop a prawn farming industry Cambodia, expanding local raw material supply

Status:

•Term Sheet negotiated

•Exit by trade sale or IPOLeopard Cambodia Fund