April 22nd, 2013
But first, please sign up on the upper right to stay in contact. Thanks.
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
But first, please sign up on the upper right to stay in contact. Thanks.
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
But first, please sign up on the upper right to stay in contact. Thanks.
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.
To stay in contact and for future newsletters, please sign up on the upper right.
All thoughts and feedback appreciated.
March 18th, 2013
On Sunday, Prince Alwaleed said something important about the recent disagreement with Forbes. In an interview with the Sunday Telegraph, he said:
“They are accusing me of market manipulation…This is all wrong and a false statement. We will fight it all the way against Forbes.”
Arabian Business reported on the interview, saying “In an interview with the Sunday Telegraph Prince Alwaleed said he will pursue legal action against the magazine.”
This is a big deal. A disagreement over a wealth ranking has just escalated into something much more serious.
—
The Forbes article in question is Prince Alwaleed and the Curious Case of Kingdom Holding Stock (by Kerry Dolan). The article is mostly a (somewhat angry) response to a disagreement over the Billionaire’s List. But within it there is a big innuendo / inference / “whatever you want to call it” – about a “curious” relationship between changes in Kingdom Holding’s share price and the timing of Forbes’ Billionaire’s List calculation. It is this part of the article that Alwaleed has now openly called a false accusation of market manipulation.
This raises a new question: did Forbes libel Alwaleed?
Stock market manipulation is a serious crime. Is the accusation there? Alwaleed says it is. Was there an intent to harm? I’ll leave it to the lawyers.
Read The Rest →
March 15th, 2013
The recent Forbes article on Prince Alwaleed is angry. And not just a little.
The article (by Kerry Dolan) floats innuendo after innuendo. His company’s stock price movements “curiously” match the timing of the Billionaire’s List calculation. Alwaleed got “help” from his family in building his company and in making Western acquisitions.
It makes ridiculous, sweeping statements, such as “image is everything to Prince Alwaleed”, he craves “outside validation”, and that “his paramount priority…is Forbes’ list of global billionaires.”
And there is a nastiness that permeates almost every paragraph. His palace is “absurdly opulent”, his publications are a “big-bucks information dump”, his plane has a “throne” for a chair, his “twentysomething wife” must fit her life into his schedule, and so on. It’s hard to read the article without noting an underlying sneer.
But what really got my attention was the analysis. Forbes went into significant depth on Alwaleed’s business, his investment strategy and his behavior / operating methods. And it’s shocking. The analysis is bad. And not just a little.
Read The Rest →
February 15th, 2013
By Jeffrey Towson, Kevin Tetarenko, Ehab Tantawy
But first, please sign up on the upper right to stay in contact. Thanks.
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
Good interview with Steve Forbes.
February 2nd, 2013
An interview with David Riedel, founder of equity research firm Riedel Research
Please sign up on the upper right to stay in contact. Thanks.
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.
But first, please sign up at the upper right to stay in touch. Thanks.
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 →
