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Rainforest Capitals Investment Strategy

Rainforest Capital Cambodia's investment strategy and guidelines

Investment Strategy:

  • Click this link to see our document:-Brief Document of Investment Strategy

  • Model of HNI:

  • Click this link to see our document:-Model for HNI

  • The investment strategy focuses on venture, expansion, and buy-out opportunities primarily in the Cambodian mid-market. Targeted sectors include rural focused financial services, agribusiness/food production, energy and telecom infrastructure, consumer goods, and building materials.

    Our investment style is particularly hands-on, as some of our investments will be in an early stage. We will work closely with the investee companies management teams on strategic and operational issues spanning product / market development, executive recruitment, fund-raising, and financial control. Rainforest Capital ensures that its funds fulfill corporate social responsibility standards.

    Investment objectives:

    • To achieve medium and long-term capital appreciation, and to generate recurring income from dividends and other sources

    • To invest primarily in Cambodia-focused businesses

    Investment parameters:

    • May invest in companies and assets at all stages

    • May invest through various financial instruments

    • May make controlling or minority investments

    Favorable investment climate

    • 100% foreign ownership, except land (99-year land leases)

    • Attractive investment incentives

    • Open capital account; easy repatriation of profits

    • Government-Private Sector Forum helps reduce obstacles and inefficiencies

    Largely “dollarized” economy

    • Minimal foreign exchange risks

    • Stable monetary policy and fiscal responsibility

    Increasing trade integration

    • WTO member since 200...

    • ASEAN membership offers regional trade benefits

    • Duty free or preferential export access to most developed economies

    Advantageous labor conditions

    • Among Asia’s lowest-cost workforces

    • Abundance of willing, trainable workers

    • Rising literacy rate has surpassed 75%

    Improving transport connectivity

    • All key road and bridge links with neighboring countries have been or will soon be upgraded

    • Railroad system is being rehabilitated

    • Container sea port in Sihanoukville has been modernized and expanded

    • River port in Phnom Penh is being relocated and enlarged to better access Vietnam’s new deep sea ports

    • Three international airports have been opened

    Lower costs in telecoms and internet; power next

    • Hyper-competition in mobile and internet sectors has cut user costs

    • New hydropower and coal-fired power plants underway will replace oil-based generation and cut energy costs

    Untapped natural resources and land

    • Fertile land for production and processing of agricultural commodities

    • Aquaculture and livestock farming and processing potential

    • Abundant mineral deposits await mining

    • Off-shore oil and gas reserves

    • World-class tourism sites (beaches, islands, history, culture, nature)

    Underpenetrated, growing domestic consumer market

    • Exceptionally youthful demographics ensures rising domestic demand (61% of Cambodians are under 25 years old; median age: 21)

    • Workforce participation, household formation, and urbanization will all show robust growth over the next decade

    • Per capita GDP and purchasing power has more than doubled over the past decade and will continue to rise

    • Emerging import substitution opportunities in various industries

    Unleveraged financial position

    • Relatively low levels of sovereign, corporate, and consumer debt

    • Well capitalized, conservative banking system

    • No tradition of government bailouts and subsidies (capitalism’s last bastion)

    Future stock exchange

    • Cambodia Stock Exchange launched in 2011

    • Listing criteria are not onerous

    The Role of Private Equity

    Cambodia’s banks require debtors to pledge land titles as loan collateral and the bank typically lends 30-50% of the land’s assessed value. While this strict approach has helped keep the banking system solvent, it has excluded many businesses from securing project finance or working capital from banks. In the absence of equities or bond markets, or leasing or factoring companies, private equity stands out as one of the only viable and flexible financing solutions. Rainforest Capital has gained prominence in Cambodia as the country’s first, largest, and most experienced private equity group. Thus, it is uniquely positioned to invest in many of Cambodia’s best businesses through transactions negotiated in a comparatively non-competitive environment.

    For more information on investment opportunities in Cambodia, please see our Newsletter, Media Coverage, Documents and Links sections.