April 22nd, 2013
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Healthcare is one of those subjects I obsess about. The dollars are huge (e.g., $3 trillion in the USA). It is uber- complicated. And as the government is perpetually involved, things are always economically contorted. You can find ridiculous profits and ROIC’s in healthcare, such as you would never find in free markets. It is politically distorted capitalism writ large – which I like.
Healthcare deals also tend to scare off lots of smart investors. Human disease is inherently complicated. Healthcare services largely defy attempts at standardization. And healthcare investing requires a mix of business, clinical and policy knowledge – a pretty rare combination. So lots of smart investors just stay away. If you have a room of 100 investors, virtually everyone will have an opinion about Wal Mart and Apple. But as soon as you mention a medical device company, 90% go silent. There is just a lot less competition for healthcare investments – which is a big thing in private deals.
And if you add China into this discussion (i.e., clinical + business + politics + China), you pretty much eliminate the other 10%. When it comes to China healthcare investments, I usually find myself the only person in the room with an opinion.
The article is continued here (page 11)
April 22nd, 2013
An interview with Roberto Charvel, Managing Partner at Vander Capital
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Private equity and venture capital in Mexico is becoming more and more interesting. The revenue numbers have become impressive so there are significant-sized opportunities now. There are deep US cross-border ties so the deal networks are there. And the deals are still off the radar for most US investors so it’s both an attractive and under-mined area. The interesting question is how to capture the opportunity.
With this in mind, we spoke with Roberto Charvel, founder and Managing Partner of Vander Capital Partners in Naucalpan de Juárez, Mexico. Vander is a privately owned investment group that focuses on early stage equity financing. They have unique expertise in value added early stage deals, typically working in close collaboration with local entrepreneurs. We asked Roberto about his current strategy and deals (including Kubo Financiero) – and where he sees the opportunities in the coming years.
Jeff: How would you describe the approach of your group?
Roberto: We are an early-stage opportunity firm. Our focus is on three industries: real estate, mining and financial services. The first two of these are not traditionally thought of as venture capital areas in the developed world. But they are great non-traditional opportunities in emerging markets, especially in countries like Mexico.
Interview is continued here.
April 22nd, 2013
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Venture capital is one of those areas where foreigners can invest in China from a position of strength. Having expertise in a cutting edge technology and / or having access to global markets is usually more important than having capital. And these are deals where foreigners can often trump local venture capitalists relying on guanxi. High technology venture capital is a particularly effective long-term investment strategy for foreigners in China.
It also happens to be one of the most rapidly growing sectors in the economy. Overall GDP growth may be slowing (likely 7% in 2013) but the technology and internet economies are surging (+15%).
This month, we spoke with Richard Hsu, Managing Director of Intel Capital overseeing investments in China. Based in Beijing, Richard and his team have invested over $650M in +100 Chinese companies since 1998. We spoke with him about his strategy, recent investments in Cloud Union and ZZNode Technologies, how the investment landscape has changed and where he sees the opportunities going forward.
Jeff: How do you approach investing in China? What gets you on a plane quick if you see an opportunity?
Richard: At the end of the day, we’re a strategic investor. Our investments are aligned with what our businesses are doing. We’re not going to go invest in something just because it can be a great financial opportunity. But we also can’t go and invest if it has nothing to do with our business. That’s the first filter we look at: Does a particular business have something to do with our industry and how does it help our overall strategy? Is this company going to help expand the overall market for our products? Is it going to enhance Intel’s capabilities?
The second filter we go look at is “Is this particular investment going to make money for us? Is it a viable, long term company? Does it have a realistic business plan?” That’s where we start converging with the traditional financial investor approach.
The interview is continued here.
April 22nd, 2013
Articles this month include:
- A Value Added Strategy for Mexican Private Equity - An interview with Roberto Charvel of Vander Capital
- The Relapsing Remitting Sclerosis of China’s Healthcare System
This month’s newsletter can be downloaded here.
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All thoughts and feedback appreciated.
February 15th, 2013
By Jeffrey Towson, Kevin Tetarenko, Ehab Tantawy
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What Happened to the New Silk Road?
In 2007, the “new Silk Road” was born. It was headline-making vision for how the Middle East and Asia would reconnect after 700 years of political and economic separation. It was a grand vision – a historic re-opening of ties that would be a game-changing new geopolitical axis.
And the economics of this vision were both simple and powerful. Oil-rich GCC countries would integrate with rapidly rising and energy hungry Asia. The new Silk Road was to be the beginning of massive movements of oil, capital, infrastructure projects and people. Read The Rest →
January 29th, 2013
An interview with Kofi Bucknor, Managing Partner of Kingdom Africa Management and advisor to Prince Alwaleed
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In 2003, Prince Waleed made a surprising announcement. While the rest of the world was looking at tech stocks, housing booms and Asian growth opportunities, Waleed announced he was going to Africa. And he was going big.
It was a shocking idea. Almost no major investors were in Africa at that time. Africa was “stagnant”. Africa had political problems. Africa was the “lost continent”. The investor sentiment at that time could not have been more negative.
But Waleed is the world’s first global value investor. And he has, like most master value investors, a finely- tuned radar for when market sentiment is wrong or overly pessimistic. And Africa looked like a continent-sized mispriced value play.
Read The Rest →
January 29th, 2013
Articles this month include:
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December 4th, 2012
I found my life got dramatically more effective – and a lot less anxious – at two key moments.
The first was when I realized I didn’t really understand business. I could quote past studies. I could fill charts with data. I could recite various pieces of wisdom from various people. But my understanding was like a patchwork quilt of other people’s thinking. It wasn’t a real understanding of the underlying mechanics. Not really. Just descriptions of various outcomes.
So one day, I just went back to mathematics, the only thing I was ever a natural at in life. I dropped all my business training and started to look at investing as one giant math problem. I discarded all the language and began creating my own. I stopped thinking about security analysis and started reframing everything as uncertainty analysis.
And suddenly everything clicked (key moment #1). (continued)
The full article is available for download here.
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December 4th, 2012
I’m writing this month’s letter from Hohhot, Inner Mongolia. It is a reasonably pleasant day here. Big, big blue skies. And chilly, of course, as the wind comes blowing in from the grasslands.
Hohhot is one of those places that gives you a real sense of China. It is the Omaha of the People’s Republic. There is nothing sexy about it.
Most of the demand for most goods and services is local. It is neither a big export economy like Guangdong, nor is it a flashy, capital attracting frenzy like Shanghai. People lead fairly standard lives: a good family, a nice apartment, a good job during the week and movies and restaurants on the weekend. Second-tier cities like this give you a real sense of the Chinese economy.
Three things in the past day have caught my attention here. 1. The shopping malls are just packed.
These are not the Grade A shopping centers of Beijing or Hong Kong. (continued)
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December 4th, 2012
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Western investors and Latin American are the “odd couple” of value investing.
In terms of geography, culture and even language they are quite close – especially when compared to other developed to developing economy situations. And you have a long history of personal relationships between the regions which is critical for cross- border deals.
And yet, Western capital and Latin American opportunities remain conspicuous far apart.
It’s a problem but its also an opportunity. This is the type of situation where trusted investors can add tremendous value.
In this vein, we spoke with Carlos Zalles of LW Investment Management. Mr. Carlos Zalles has been operating between the West and Latin America for over thirty years, with a strong focus on natural resources. We spoke with him about what opportunities he sees in Latin America today – and what his predictions are for the next 3-4 years. (continued)
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