New PE Firm Says Sri Lanka Is Cinderella Story Of Asia

Private equity investors wax poetic about Asia, but for the most part, by Asia, they mean established economies like Japan, or up-and-comers like China or India. Sri Lanka tends to be an area that gets a lot less focus, but one firm, Singapore-based Calamander Capital Ltd., hopes to change that. Calamander, headed by Chairman Roman Scott, is looking to raise $150 million to invest in the South Asian island nation. We caught up with Scott to ask him why.

How do you get comfortable with political risk in the country after a three-decade war?
Outsiders, especially Westerners, don’t understand that over the last six years, Sri Lanka has grown faster than all ASEAN (Association of Southeast Asian Nations) countries except Vietnam. Now imagine what you can achieve without the war. The war thing has always been a perception issue. Unlike the situations in Iraq, Afghanistan or Israel, what happened in Sri Lanka over the last two years is that the Tamil Tiger rebels have been largely removed. The political risk is not the resurgence of the Tigers movement, because there are no Tigers to resurge. The risk instead is fighting the economic war, and putting in place the right economic policy.

What kind of investors are you marketing the fund to?
We’d like to have an investor base as mixed as possible and hope to have no more than one-third of investors coming from the U.S. and Europe. But for the majority, our focus is on Asia, particularly Indian institutions and high-net worth individuals, and to a lesser extent, ASEAN and the rest of Asia. That’s because they understand the Sri Lanka story. It’s the Cinderella story of Asia. Like all Cinderellas, Sri Lanka is the prettiest girl although she works in the kitchen infested with rats – and Indians understand that. It’s closely tied to the Indian economy, almost like another province of India.