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 →
February 2nd, 2013
An interview with David Riedel, founder of equity research firm Riedel Research
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Investing outside of the West brings a host of challenges for value investors. There are different politico- economic systems, rapidly changing economies, unfamiliar cultures, different consumer habits, different languages, limited information, weak governance, and so. These types of uncertainties can be challenging for traditional security analysis – especially when the analyst is located halfway around the world.
This month we spoke with David Riedel of Riedel Research Group about investing in such environments. Riedel Research group is an independent emerging markets-focused research firm. We asked him about where he sees opportunities today and how he deals with the unique aspects of analyzing developing economy companies.
Jeff: First question. For your group, how would you describe your focus?
David: We are a global emerging markets independent equity research firm. We are independent, in that we don’t do banking and brokerage. We operate in Asia, Japan, Latin America, and emerging Europe, which gives us broad coverage of emerging markets. Read The Rest →
February 1st, 2013
There was a recent article in the Telegraph about how Prince Alwaleed passed on the Facebook IPO. It’s an interesting and overlooked question. Why did he pass? And I think the article got the real reason wrong.
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Some background.
People forget Alwaleed has been buying tech companies in a big way for over 15 years. He is one of the largest and most sophisticated later-stage media / internet investors around.
He is a value investor at heart. As a financial investor located far away in Riyadh, his primary weapons in the tech space are his relationships (which are awesome) and his ability to deploy large capital quickly ($300m-$1B in a single day). 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:
This month’s newsletter can be downloaded here.
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December 4th, 2012
Jeffrey Towson at Guanghua
- Jeffrey Towson at Guanghua
Guanghua Press release – Chinese version. The link is here
由光华管理学院和麦肯锡公司（McKinsey & Company）合作的校企课程——当前中国投资与战略专题（Current Topics on Chinese Strategy and Investment）于本月18日晚热烈开讲。今年是该校企合作课程开设的第三年，与前两年一样，该课程一开讲便立即受到MBA同学的追逐和热捧。
课程第一讲由Jeffrey Towson先生主讲，Jeffrey Towson先生在从事投资行业的同时还在剑桥大学任EMBA课程教授，他是畅销书的作者。他的研究领域集中于新兴市场（中国，中东，拉丁美洲等），以及他们与西方日渐增长的互动关系。
Jeff一开场便向大家提出了Carlos Slim及其名下公司、迪拜塔和中国移动的问题。在新兴市场中，这三者都在自己的行业领域中处于全球首位或者接近全球首位（Carlos Slim还是是世界首富）。随着Jeff的讲解，这些在新兴经济国家里读MBA的学生们，很快就领悟到了问题的要点——新兴经济体在过去十年中获得了巨大的经济增长。
接下来课程进行了对上海迪士尼项目的案例分析。同学们分组讨论并扮演不同的角色——上海市政府、本地开发商和合作伙伴、迪斯尼和国际合作伙伴以及中间人：投资银行和顾问。问题集中于讨论项目对各方的利益、动机、挑战、以及合作利益。
几轮讨论之后，大家一致认为该项目有利于各方合作从而获利。接下来，Jeff抛出一个问题：如果上海迪士尼项目的规模增加一倍，两倍，或膨胀至迪拜乐园（上海迪士尼项目的12倍）的规模后是否还能一样获利呢？规模如此巨大但已经被证明并不经济的项目是否会使中国经济受重创呢？中国经济未来注定会面临迪拜似的崩溃吗？由于中国的内部需求潜力和对其面临的挑战的意识，Jeff并不认为中国经济注定要崩溃，这让在座的同学们松了一口气。
Jeff对新兴市场的洞察与他丰富的投资经验让这门课充满了与时俱进的味道并且具有权威性。他独特的讲述风格牢牢的吸引着、激励着大家去思考。同学们没有被牵着鼻子走，而是通过讨论和思考，共同领悟了课程的中心思想。
