Profile: Anthem Asia's Josephine Price

"You have to be slightly mad to set something up," observes Josephine Price, co-founder and managing director of Myanmar-focused PE firm Anthem Asia. "When we set up the private equity platform at CSLA it was very hard. We spent years building a team, banging on doors and trying to get deals done. You have to really want it."

Price has a long-standing interest in corporate governance, social enterprises and impact investing. She saw these issues converging in Myanmar, a country on the cusp of reform and brimming with potential, but badly in need of development capital.

"Myanmar is the last frontier market in Asia, apart from North Korea," she says. "While Cambodia and Laos will eventually become peripheral to the big PE markets, Myanmar can become one of them. It is geographically significant. It has ports, power and energy, and a big domestic population. If you look at where private equity has been successful in Asia, you have big domestic populations."

Price's journey to Myanmar started in Hong Kong in the early 1980s. A lawyer specializing in corporate restructuring, she advised on the takeovers of listed companies that characterized early PE activity in the region. In 1995, CLSA recruited her to help develop CLSA Capital Partners. Over a decade later Price departed and worked on various projects in the region, "but nothing for which I was directly responsible," she explains. "When I left CLSA I had this idea that I wouldn't do an awful lot: it didn't last long."

Birth of an idea

Myanmar has flattered to deceive investors before. For a few years in the 1990s, it opened up and a number of PE players found their way in, but hopes were dashed when the government intervened and closed down activity.

Anthem originated at a more positive time and with a different agenda. Price pinpoints the first serious conversation she had on the matter to a party on New Year's Eve 2011. Earlier that month, Hillary Clinton became the first US Secretary of State to visit Myanmar in 50 years, a nod to the government's tentative political and economic reforms. There was a sense that Myanmar was approaching a stage at which investment potential could start to be realized, but an uncertainty as to how this might happen.

"We agreed it was going to be a really good market but people would make the same mistakes as in other frontier markets," Price recalls of the party. "I felt it would be interesting to try and do something different. I wanted a platform to do responsible investment, working with smaller companies and making money, but in the right way."

A nine-month feasibility study offered further insights into the nature of the opportunity. Myanmar has a few very large business groups and then lots of smaller companies; the middle market is virtually non-existent. This is in part a function of necessity. The typical entrepreneur owns 5-6 businesses and has been careful not to allow any to grow too big due to historical fears that the authorities will seize control of plum assets. Clearly there was scope to take some of these small but often well-managed firms and helping them achieve more meaningful scale.

Anthem raised an evergreen pool of capital in 2012 from high net worth individuals and family offices. The team of four has since made four investments in the services sector, two of them control deals. Check size ranges from $150,000 to just under $1 million, although more capital will likely be required as the companies expand.

First steps

The first investment was in a wholly-owned office center that is leased out to an array of local businesses. It gives Anthem exposure to the lawyers, accountants, suppliers and contractors who form the fabric of the local business community, allowing the firm to build relationships that can generate further deal flow.

Convincing an entrepreneur to sell equity to a third-party investor is understandably challenging in a society that is trust-based rather than rules-based and private equity is little understood. Anthem made a breakthrough six months ago with Thahara, a tourism and property platform. "These things don't come to you as deals," Price says. "You have a conversation and you think, ‘We could do it like this.'"

Anthem's objective is to build up a series of profitable businesses and strong relationships so that these conversations become easier. Private equity deal-sourcing prowess is driven by brand, contacts and reputation, and in Myanmar the latter is most important. "If you are small company and a large foreign player comes in it is a bit intimidating," Price explains. "But if we are able to show we can work with local partners then we can build up that social capital."

It is still very early days. If and when Anthem graduates to a formal fund structure, the firm will have to provide more clarity in areas such as investment size, length of holding period and exit routes. There are also broader questions for Myanmar regarding the development of an economy overseen by an opaque administration, and the role of private equity in it. Price is familiar with the rush-in, rush-out dynamics of frontier market cycles and preaches patience.

"It is the fog-of-war as opposed to the three-year plan," she says. "You land on the beach and instead of waiting for a guy in headquarters to tell you what to do according to a pre-set plan, the fog clears for an instant, you see something, and you go for it. That is the strategy for frontier markets. We have an idea as to where we are going but it will take time to get there."

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• Topics
• Southeast Asia
• People
• Anthem Asia
• Southeast Asia
• Myanmar