Campden FO summer edition 2011 - Charles-Lim Capital

Campden FO summer edition 2011
“
…Campden FO is the only global
magazine dedicated to covering
the growing market of private
single and multi family offices…
”

Sponsored feature
Successful family office
investing in Asia
Wealth Funds for the Long-Term
The most sophisticated family office
investors are investing in the best
opportunities available globally, many of
which are in businesses benefiting from
ongoing development of the fastest growing
major region in the world – Asia.
Charles-Lim Capital, an independent
Asia-based investment firm, manages
focused portfolio funds that invest in listed
equity securities with a distinct emphasis on
businesses in Asia that are well-positioned
to benefit from the region’s ongoing
development.
Keiren Charles, founder and Executive
Chairman, says: “We view the capital we
manage as wealth funds for the long-term.
We seek to invest in the best Asia exposures
globally and focus on our highest conviction
ideas. We employ a global value investing
philosophy combined with quality discipline
and a deep understanding of long-term
economic and industry drivers.”
Like many family offices, Charles-Lim
Capital’s guiding objective is to compound
Indicative Long-Term Growth Potential of Countries in Asia
14 Campden FO Summer 2011
“Sophisticated and forward-looking family offices
are positioning themselves well to invest in the best
listed businesses in Asia ... opportunities continue
to unfold in a manner that is advantageous for such
family offices given their natural strengths.”
wealth intelligently and carefully for the
long-term. The principals of Charles-Lim
Capital have achieved exceptional results
investing in Asia through independent
thinking, value discipline and by adhering to
common sense principles.
A family-owned firm, Charles-Lim Capital
accepts co-investments from institutions,
family offices and high net worth individuals
globally, and commits to investing personal
capital alongside clients.
The Family Office Advantage in Investing
in Asia
In the experience of Charles-Lim Capital’s
principals with investors in Asia (including
strategic investors, sovereign wealth funds,
hedge funds, family offices and mutual
funds), sophisticated family offices can be
well-positioned to invest in many of the best
listed opportunities in Asia.
The principals of the firm recently wrote
a detailed research article entitled “The
Family Office Advantage in Investing in
Asia” which discusses the traits of successful
family offices investing in Asia, as well as
common pitfalls that family offices may face,
extracts of which are discussed here.*
Investing in Tomorrow’s Asia ... The
Long-Term Investment Thesis
“If you’re growing at 10% per annum in
China, you are nobody”, according to a
senior representative of a leading Chinese
corporation that the principals of Charles-
Lim Capital met with recently. Such is the
reality in many parts of Asia, where whole
industries are emerging on a large scale, and
certain enterprises with strong businesses in
fast-growing economies and industries may
gain in value substantially in years to come.
Relative to most developed countries
globally, populations in emerging Asia are
younger, are growing more rapidly and
have significantly lower per capita incomes.
This will likely support ongoing GDP
growth and per capita income “catch-up”
that is happening more rapidly than many
appreciate. Rising incomes are increasing
demand for goods and services ranging from
cars, household items, food and beverages,

to banking services and healthcare, to
luxury goods, travel/tourism and others.
Family offices and family businesses can
appreciate the investment significance
of economic growth in Asia, often having
capitalised on long-term trends in building
businesses over decades even centuries, and
having seen profound changes in societies,
economies and industries.
Successful family offices investing in Asia
recognise the importance of in-depth, firsthand
knowledge of diverse and evolving
economies, industries and companies
in the region. The principals of Charles-
Lim Capital have extensive investing and
business experience, and unique insights
across the Asia-Pacific region (including
China, India, South-East Asia, Japan),
having held various senior corporate and
strategic roles including advising CEOs,
CFOs, governments, boards and sovereign
wealth funds on landmark business
purchases/sales and capital-raisings.
In its work with family offices, Charles-
Lim Capital combines deep fundamental
analysis, value-oriented strategies,
corporate strategic understanding and
industry selection with proprietary
economic and quantitative models which
have been developed over years.
Seeking the Best Asia Exposures...
Global Approach, Original Thinking
An important natural strength of successful
family offices is the ability to invest in
the best exposures across Asia and global
markets. Such family offices can maximise
their opportunity set in seeking undervalued
and quality Asia businesses, and
also take advantage of inter-country pricing
inefficiencies.
It is important for family offices to
appreciate that the best Asia exposures
are often in quality companies that are
under-researched or not well-understood
– Asia’s “blue-chips of tomorrow” are not
necessarily the high-profile Asian companies
today. However, finding value does not
require investing in small-cap or low
liquidity companies; Charles-Lim Capital’s
investment universe has an average market
capitalisation of approximately US$30bn.
Investing Like Business Owners
Successful family office investors in Asia
use the same logical principles and sound
business strategies that have led the family
business to be a successful creator of wealth
for the family. Put simply, such family
offices invest “like business owners” and
without the use of leverage, providing them
with another important advantage when
investing in Asia, holding power.
Value Investing, Quality Discipline
Experienced family offices investing in Asia
focus on simple, under-valued opportunities
and quality businesses. They reject the
* For further information please contact:
Keiren Charles
(kcharles@charleslimcapital.com)
Lim Shueh Yung
(sylim@charleslimcapital.com)
Sponsored feature
“We view the capital we manage as wealth funds
for the long term ... we co-invest with clients and
seek to invest in the best Asia exposures globally.”
mindset that higher returns requires higher
risk and complexity, and avoid any poor
“required” exposures.
While great importance is placed on buying
“low”, investment quality is just as important
in Asia, and knowing what to avoid is critical
given rapid growth in Asia and the numerous
IPOs in recent years that have resulted in
large numbers of publicly listed companies,
some of which are relatively untested.
Genuine Alignment of Interests
Family businesses are typically led
by a family member with significant
shareholdings and therefore trusted by the
family to make the right decisions given
aligned interests.
Successful family offices investing in
Asia apply the same principle and select
investment managers who treat them as
true partners and “eat their own cooking”
by investing personal capital alongside the
family office.
Conclusion
Sophisticated and forward-looking family
offices have natural strengths that can enable
them to invest successfully in Asia and
compound wealth for decades to come. It is
important for family offices to invest with the
right principles and with the right partners.
Level 15, 100 Queen’s Road Central,
Central, Hong Kong
T. +852 3180 9245
www.charleslimcapital.com
IMPORTANT NOTICE: The information provided in this article is current as of the date of publication and is subject to change. This article does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a
recommendation to purchase or sell any particular security. Nothing in this article shall constitute financial, tax or legal advice. Parties shall be responsible for making their own investment decisions based on independent advice. Past performance is not necessarily an
indicator or guarantee of future results. Charles-Lim Capital Limited holds a Type 9 asset management license in Hong Kong which enables it to undertake discretionary asset management services for Professional Investors (as defined under Hong Kong law) only. Charles-
Lim Capital is not licensed in any jurisdiction other than Hong Kong. Nothing in this article shall be taken to constitute an offer or invitation to any party to enter into any investment product, service or opportunity where it would be unlawful for Charles-Lim Capital to do so.
Summer 2011
Campden FO
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