Silk Road Finance enters Myanmar
Frontier markets-focused investment bank Silk Road Finance has set up a Myanmar subsidiary and won a mandate to raise a private equity and venture capital fund dedicated to investing in the country.
The new entity, known as Mandalay Capital, is modeled on Eurasia Capital, Silk Road's Mongolia investment banking arm. It offers strategic advisory services covering capital raising, cross-border M&A and building relationships with companies and institutions in Myanmar.
Several private equity firms have announced plans to raise Mynamar funds as the resource-rich country gradually becomes more globally integrated.
Country-specific vehicles are in the pipeline from Leopard Capital, Bagan Capital and Link Road Capital Management. Cube Capital may commit one third of its current $200 million fund in Myanmar, while a $250 million joint venture vehicle between Dragon Capital and Frontier Investment & Development Partners is likely to include the country in its regional portfolio.
Leopard will target the real estate, financial services, infrastructure and utilities industries, partnering with Asian multinationals. Speaking to AVCJ in February, Doug Clayton, the firm's founder, described Myanmar as "one of the remaining jewels of the frontier space, with a potential 10x catch-up story once the reforms are anchored."
The IMF projects GDP growth of 5.5-6% in 2012, up from 3.6% in 2008 and inflation is expected to pick up as the recent decline in food prices phases out. The parallel market exchange rate of the kyat has already appreciated by about 32% in nominal effective terms since the end of the 2010 fiscal year, primarily due to large foreign investment inflows.
Last year, Silk Road raised $30 million for its debut fund called the Mongolia Human Capital Fund, exceeding the original target of $25 million. Capital came from family offices and high net worth individuals from Asia, the Middle East, Kazakhstan and Russia. Eurasia Capital is in the process of raising a $100 million Mongolia fund in conjunction with Korea's Doran Capital Partners.
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