TPG’s Bonderman visits Burma

15-May-2012 Intellasia | | 7:01 AM Print This Post

David Bonderman, co-founder of US private equity group TPG, visited Myanmar last week to meet political and business figures in the latest sign of growing investor interest in the country amid the easing of western sanctions.

In the first visit by a top US private equity investor since the reformist government of President Thein Sein came to power in early 2011, Bonderman met U Soe Thein, Myanmar’s minister for industry; government officials; opposition leader Aung San Suu Kyi; and local business leaders. His aim, according to a person involved in the discussions, was to “get a sense of new investment opportunities and the emerging regulatory framework”.

US investor George Soros visited the country in December, but his meetings with top government officials and Ms Suu Kyi focused on his philanthropic programmes.

Bonderman is known as one of the boldest US private equity investors. TPG was among the first US groups to invest in Russia and Vietnam and has a longstanding presence in Indonesia, along with its local affiliate Northstar. The co-founder of Northstar, Patrick Walujo, and several TPG executives accompanied Bonderman on his Myanmar visit, which took in Yangon and Naypyidaw, the capital.

By contrast, TPG’s three main rivals, Blackstone, Carlyle and KKR have lagged behind in south-east Asia and are yet to do a single deal in Indonesia, the region’s largest country.

TPG’s visit comes as five or six western and Asia-based investment firms draw up plans to launch Myanmar-focused funds. They include Cambodia-based Leopard Capital, which specialises in emerging market funds; Hong Kong-based Bagan Capital, which is targeting a $50m fund; Yangon-based E&O Capital, which aims to raise a $30m fund; and Indochina Opportunities Fund – a joint venture between Asia-based Dragon Capital and Frontier that has allocated a portion of its new $250m fund to Myanmar.

Douglas Clayton, Leopard’s chief executive, told the Financial Times the group hoped to set up a $100m investment fund for Myanmar once the US lifted sanctions.

“We’ve been waiting for 23 years for Myanmar to become ‘investable’, so this is an exciting time… There will be some great returns for people who get in early and get it right.” But, he added, “while investment rules are changing the implementation process is hazy… and US sanctions put US investors at a global disadvantage”.

Among promising sectors for investment, added Clayton, were property, tourism, and infrastructure. However, he warned, “whole industries have to be built up from scratch”.

Christian Oram, of E&O, said the group had “a pipeline of projects” including property, industrial, telecommunications and agribusiness for which they were seeking investment for private placement. E&O also hoped to launch its investment fund within the next 12 months, he added.

Thura Soe Paing, managing director of All Myanmar Investment Partners and a partner in the Indochina Opportunities Fund, said Myanmar was not ready for straightforward private equity deals, “even bearing in mind that funds take time to set up, and there are remaining western sanctions to deal with”.

The US suspended some key financial and trade sanctions against Myanmar after the country’s April 1 by-election, which brought Ms Suu Kyi and 42 members of her National League for Democracy into parliament.

But many curbs remain, particularly on direct US investment, which are likely to deter US investors for at least a year, say investors. In addition, until sanctions are lifted completely rather than suspended, Myanmar is seen by many as too risky.

While Bonderman said sanctions were an issue, he was hopeful that remaining restrictions would be lifted by the end of the year, according to a person involved in the discussions.

Despite the uncertainties, Myanmar could emerge as the region’s “next frontier” if the government remains on track with political and economic reforms, the EIU concluded in a new report about the investment outlook. Among investment bank analysts who have begun to focus on Myanmar, CLSA’s Christopher Wood said the country is “potentially an amazing growth story, with all manner of mineral riches”.

TPG is moving towards a $1.5bn first close in fundraising for its latest Asian fund, with an eventual goal of at least $4bn.


Category: FinanceAsia

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