CAL to buy 51 percent of Hong Kong frontier fund manager Asia Frontier Capital at USD 2.5Mn

Capital Alliance Holdings (CAL) has signed an agreement to acquire a 51 percent stake in Asia Frontier Capital (AFC), a Hong Kong-based fund manager that specialises in frontier equity markets. The deal is subject to regulatory approvals, including approval from the Securities and Futures Commission of Hong Kong, before it can be completed.

CAL is making the acquisition through its wholly owned Singapore-based subsidiary, CAL Global. The companies did not disclose the value of the transaction.

The deal widens CAL’s international reach. It links the group’s operations in Sri Lanka, Bangladesh and Singapore with AFC’s platform in Hong Kong, and with AFC’s teams on the ground in Vietnam, Uzbekistan and Iraq. CAL says the combined presence will let it pair local market insight with access for international investors, and broaden the channels through which foreign capital reaches frontier markets.

A route into frontier markets

“Frontier markets offer some of the most compelling growth stories in the world, yet they remain hard for international investors to reach,” said CAL Group CEO Kanishke Mannakkara. He said the partnership adds three more frontier markets and a base in Hong Kong, one of the world’s key financial hubs. CAL, he said, would act as a conduit for international capital into frontier markets and for investors in its own markets to reach opportunities across the frontier and beyond.

Mannakkara praised AFC’s founder, Thomas Hugger, and his team for building what he called a respected franchise over more than a decade.

AFC’s track record

Hugger founded AFC in 2013. It manages more than US$125 million for investors in Europe, Asia and North America. Its funds include the multi-country AFC Asia Frontier Fund and dedicated vehicles for Vietnam, Iraq and Uzbekistan. AFC has also invested in Sri Lankan and Bangladeshi equities for many years, and is known in the local investment community as a pioneering international investor.

Hugger said investors in AFC’s funds would see no change in how their money is managed, with the same team, investment process and independence in decision-making. What changes, he said, is the strength of the platform behind the business. He pointed to CAL’s research and data capabilities in markets where information is scarce, its long-standing expertise in frontier fixed income, and its relationships with investors across South Asia. The backing of a listed and well-governed group, he added, would also strengthen AFC’s compliance, technology and operating platform.

About CAL

CAL was established in 2000 and is listed on the Colombo Stock Exchange. It provides investment banking, asset and wealth management, fixed income, stockbroking and research services, and manages assets of more than US$1.2 billion across Sri Lanka and Bangladesh.

After the acquisition is completed, CAL and AFC intend to look at widening AFC’s product range, including frontier fixed income and country-specific strategies, subject to regulatory requirements.