Capital Alliance Holdings PLC (CAL), the parent of CAL Bangladesh, has agreed to acquire a 51% stake in Hong Kong-based fund manager Asia Frontier Capital (AFC), extending the investment group into three more frontier markets.
The acquisition will be made through CAL Global Pte Ltd, its wholly owned Singapore subsidiary, and remains subject to regulatory approvals, including clearance from Hong Kong’s Securities and Futures Commission.
AFC, founded in 2013 by Thomas Hugger, manages about $125m for investors across Europe, Asia and North America.
Its funds invest across Asian frontier markets, including dedicated strategies for Vietnam, Iraq and Uzbekistan. AFC’s official materials also identify Thomas Hugger as its founder and CEO and confirm its focus on Asian frontier equities.
For CAL, the deal would link its existing operations in Sri Lanka, Bangladesh and Singapore with AFC’s Hong Kong platform and investment teams covering Vietnam, Uzbekistan and Iraq.
That would give the group a wider base for raising international capital for frontier markets while also offering investors in its existing markets access to a broader range of assets.
“Frontier markets offer some of the most compelling growth stories in the world, yet they remain hard for international investors to reach,” CAL Group CEO Kanishke Mannakkara said.
He said the acquisition would take CAL into three additional frontier markets and Hong Kong, while providing a platform to deepen its presence over time.
AFC already invests in Bangladeshi and Sri Lankan equities, giving the two groups an existing overlap in markets even before the transaction.
Hugger said AFC’s investment team, process and independence in investment decisions would remain unchanged, while CAL would add research, data, compliance, technology and frontier fixed-income capabilities.
“Frontier markets reward local knowledge and patience, and CAL has both,” he said.
Founded in 2000 and listed on the Colombo Stock Exchange, CAL provides investment banking, asset and wealth management, fixed-income, stockbroking and research services. It manages more than $1.2b across Sri Lanka and Bangladesh, according to the company.
In Bangladesh, CAL Securities Limited operates as a licensed stockbroker, while CAL Investments Limited is a licensed merchant bank providing mergers and acquisitions advisory and wealth-management services.
Following completion of the acquisition, CAL and AFC plan to explore new products, including frontier fixed-income and country-specific strategies, subject to regulatory requirements.
AFC currently runs the AFC Asia Frontier Fund as well as dedicated Vietnam, Iraq and Uzbekistan funds. Its Hong Kong investment adviser is licensed for advising on securities and asset management.
The transaction will not be completed until the required regulatory approvals are obtained.
