Capital Alliance (CAL) agreed to buy a controlling 51% stake in Asia Frontier Capital (AFC), a Hong Kong based fund manager that runs single-country funds for Vietnam, Uzbekistan, and Iraq and a regional fund invested in 15 Asian markets. Together, the funds hold about $125 million. The deal still needs regulatory approval, including from Hong Kong’s Securities and Futures Commission, which is expected in 2027. The combined group would manage about $1.3 billion.
Kanishke Mannakkara, CAL’s Group Chief Executive Officer, says the Colombo firm is outgrowing its home market and needs a platform global investors can easily buy into. Thomas Hugger, AFC’s Founder and Chief Executive Officer, and Co-fund Manager Ruchir Desai say frontier stocks trade at single-digit earnings multiples and largely move independently of developed markets.
Kanishke Mannakkara – Group Chief Executive Officer, CAL
“Bangladesh was the first foray. Then, as we tried to mesh these frontier economies together, we realised we needed a piece of infrastructure in the middle that would make it convenient for global investors to take positions inside them.”
CAL has built a strong position in the Sri Lankan market as an investment bank. What led you to look beyond Sri Lanka, and how does Asia Frontier Capital fit into the picture?
Kanishke Mannakkara: We have been looking outside Sri Lanka for a while. Around 2018 or 2019 we realised we were going to outgrow this country. Sri Lanka is home and we love it, but it is a $100 billion economy with 20 million people, and at some point it will not meet the size requirements of our ambition. We realised that frontier markets were where we could make the most difference. That aligns strongly with our purpose: using capital markets to create value and make a difference to people’s lives.
Bangladesh was the first foray. Then, as we tried to mesh these frontier economies together, we realised we needed a piece of infrastructure in the middle that would make it convenient for global investors to take positions inside them.
We considered multiple routes, including setting it up ourselves, but it made more sense to buy an existing franchise that already had this infrastructure. In AFC’s case, it is a Cayman Islands fund management structure that any global investor can easily take units in. The structure is versatile and can invest in any asset class. It also takes away the downstream complexity of custodianship and bank account opening. At the moment, AFC is long-only equities, but the structure allows it to do fixed income, listed equities and unlisted equities one day. That was the thinking.
Once this deal is finalised, what will your assets look like? How much will be in Sri Lanka, how much in Bangladesh, and how much will AFC bring to the table?
Mannakkara: Assets under management (AUM) for CAL and AFC combined are about $1.3 billion. AFC brings about $125 million. CAL Bangladesh is still small, a little less than $50 million. The rest, effectively $1.2 billion, is here in Sri Lanka. That is the mix.
When you considered CAL as a potential partner for the firm’s future, what attracted you to CAL and the proposition it offered?
Thomas Hugger: CAL is also from a frontier country where we invest. I saw a lot of synergies, and we speak the same language in terms of risk appetite, and that was very attractive.
It is also not a big organisation where Asia Frontier Capital would be a small fish in the ocean. We are much smaller by assets under management, but I think we bring a lot of expertise into this organisation, and together we can grow, expand and work together.
You are a frontier market investor, which can mean a wide array of things. What are AFC’s primary focuses?
Hugger: We have four funds: one regional fund, the AFC Asia Frontier Fund, and three single-country funds for Vietnam, Iraq, and Uzbekistan. We launched the single-country funds because we believe that, above all, the clients make money. We are very positive on the long-term outlook for these three markets in particular. We have others in the pipeline, markets with a positive future that we would also like to tap.
We are value investors, which is very different from investing in developed markets, where AI, new technology, and biotech dominate. Our investment thesis leans towards bricks and-mortar companies, so a value thesis works best for these markets.
What are the considerations in investing in Vietnam, Uzbekistan, and Iraq at this point in time through a value lens? What do you tell potential participants about what is on offer?
Ruchir Desai: 2017 was the peak for frontier markets in valuation, flows, and sentiment. From 2017–18 through 2022–23, we had headwinds every year, for the broader frontier asset class and especially for our markets. In 2018, the first trade war between China and the US hit sentiment in Vietnam. In 2019, there were political issues in Sri Lanka and a macro issue in Pakistan. In 2020 and 2021, the pandemic arrived. Then in 2022, the war in Ukraine was accompanied by an aggressive US Federal Reserve and a very strong dollar. Sri Lanka and Pakistan also had their own issues.
In my view, that was the bottom for frontier markets, especially our countries, from a valuation perspective. Since then, you have seen incremental positives across the board. The AFC Asia Fund, the regional fund that I manage with Thomas, is currently invested in 15 countries, and its net asset value (NAV) has doubled in the last four years. That is because of very positive momentum in macroeconomics and political stability.
Break those four funds down. You have three country-specific funds for Vietnam, Uzbekistan and Iraq, and a regional fund invested in 15 countries, one of which is Sri Lanka. Can you give me a sense of the assets under management in each?
Desai: Overall AFC manages about $125 million across the four funds. The regional fund, the AFC Asia Fund, which I manage with Thomas, is about $30 million. The AFC Uzbekistan fund is about $32 million. The AFC Iraq fund is about $6 million. And the AFC Vietnam fund is the largest fund, about $60 million.
Thomas Hugger – Founder and Chief Executive Officer, AFC
“We are only $125 million, which is nothing in the US or even in Europe, but it is a lot of money for frontier markets. With this deal, we can go to investors and honestly say we are part of a $1.3 billion group. That will certainly help in selling our funds to institutional investors.”
What kinds of risk-weighted returns would you target? What are you seeing in the last few years, and what factors will drive returns in the markets you invest in over the next few years?
Desai: The big picture for our markets is that valuations are very attractive. We have single-digit price-to earnings (P/E) ratios across nearly all our markets. What drives stock market returns is either valuations expanding or earnings growth coming through. In our markets you have the potential for both: valuations can expand and earnings growth is solid. Those two strong tailwinds are exactly what happened over the last three or four years, and I think they will continue.
In my view, the macroeconomic and political stability in our markets has never been stronger. Despite all the noise in the Middle East, the macro and political position of these countries in the more than 10 years I have covered them has never been stronger. So I think we have a very strong platform for returns over the next five years.
Hugger: There is a reason we back each of our three country funds. Consider that Vietnam is basically a replacement for China’s story. This is not a 10- or 20-year story; it is at least 30 years. Iraq is the post-war reconstruction of the economy and infrastructure. Uzbekistan was closed for two or three decades after the fall of the Soviet Union. For much of that time it was run by a very tough leader and was called the second North Korea in Asia. That changed in 2017, and that is the investment thesis. The country opened up, as North Korea, Venezuela, or Cuba might, but unlike those countries it had a stock market, and the market was ridiculously, unbelievably cheap. We were looking at companies trading at two times P/E with dividend yields of 30 to 40%. It was very difficult to invest, though. There were maybe 20 trades a day, where now there are thousands, and hardly any stocks available.
And this period you are referring to, how long ago was it?
Hugger: We started investing in 2018, through the Asia Frontier Fund. We launched the Uzbekistan fund once repatriation of sales proceeds out of Uzbekistan was possible again, which was the sign to launch it. Before that, we invested through the Asia Frontier Fund and picked up some incredible bargains, which have now disappeared.
How do you see the investment thesis of AFC evolving now that it is a CAL subsidiary?
Mannakkara: In some ways it will evolve, and in other ways it won’t. As Thomas and Ruchir said, frontier markets are a value play combined with high growth, which you don’t see often. I will add a third dimension that makes them interesting for international investors: they move independently relative to the rest of the world.
80 to 90% of new capital formation globally is going into AI in three countries: the US, China and, to a lesser extent, Australia. That will probably change the world, but there is a strong logic for 1, 2 or 3% of global capital to go somewhere totally unrelated to that story, and that is frontier. 2% of global capital flows is more money than we can imagine in this part of the world, because the numbers here are tiny compared with global capital flows. That thesis stays constant.
Another thing is that the AFC team has been great at spotting trends. Thomas spoke of Uzbekistan; before that it was Vietnam. With a map of 20 countries to look at, one of these breakout stories happens every 2–5 years, which is exciting. Next might be Syria, the way things are going, with the Strait of Hormuz issues and Iraqi oil being shipped out into the
Mediterranean. AFC can capitalise on all of these.
Here is how that plays into CAL. AFC takes a very global, broad view of what is going on. CAL focuses on deep country expertise, which has been our model for success, creating investment outcomes within countries that are not easily replicable. We have developed a macro modelling capability in the countries we operate in, based on common principles that we know can be applied internationally. But we then go deep into a country to understand what you can unlock there. Combining the two means something quite special: AFC’s global macro perspective overlaid with CAL’s country-specific macro, to drive differentiated returns at another scale.
Ruchir Desai – Co-fund Manager, AFC
“The easiest way to sell a fund is performance. Performance always speaks for itself. You can say all the good things about frontier markets, value, and supply chain relocation, but what matters is performance.”
How will this partnership evolve as it goes forward?
Mannakkara: We will be sharing insights, not co-man aging. A car needs one driver; you can’t drive a car by consensus. A fund manager is a fund manager. Even now at CAL we have proprietary information that can not be shared. But macro data, insight, and technical analysis can be shared, so there will be a co-mingling there. You then overlay CAL’s product creation capability, where we structure and create products. That gives us an expanded range of things to offer clients, which could be interesting.
What are the next several frontier markets that have caught your attention?
Hugger: We are definitely looking at Syria. I am putting the last pieces of the puzzle together, and I am travelling tonight to Singapore to meet some of the service providers. It is not easy, because the country was heavily sanctioned and was only pardoned a couple of months ago by Donald Trump, which helped put the country back on the map for serious investors. There is a lot of interest from the Middle East.
When I started, I hoped to launch a fund in each of our frontier markets, but it is not easy because you need seed investors. The most important thing is that the clients also make money. Sri Lanka is definitely also at the top of our list.
How do you pitch your funds right now?
Desai: The easiest way to sell a fund is performance. Performance always speaks for itself. You can say all the good things about frontier markets, value, and supply chain relocation, but what matters is performance.
The fund’s NAV has doubled in the last four years. On an annualised basis, in dollar terms, returns are almost 20% over the last three or four years. That is a strong per formance. The S&P 500 is also up around 20% a year over the last four years, so we broadly match it. We definitely significantly outperformed all the emerging markets that everyone talks about: India, Indonesia, China, Thailand. Over the last five years in dollar terms, India is down 5%, Indonesia is down more than a third, and China, the Philippines, and Thailand have underperformed. Our mar kets are outperforming: Pakistan, Sri Lanka, Kazakhstan, Georgia, Uzbekistan, and Iraq.
Correlations are also very attractive. What happens in Vietnam doesn’t affect Uzbekistan, and what happens in Sri Lanka doesn’t affect Pakistan. The correlation of our AFC Asia Frontier Fund with the Morgan Stanley Capital International (MSCI) World Index, which is basically the US and a few developed markets in Europe, is 0.51. That is quite low.
Can you explain the correlation?
Desai: Correlation is how asset prices move in tandem with each other. One-to-one would be an identical movement. Ours is 0.5. So when the US is slowing down, or there are geopolitical issues in the region or globally, our fund’s correlation is not so high. That gives a family office or high-end investor diversification. Say an investor has a portfolio of 100, with 60% in the US, 10% in Europe, 10% in China, and 10% to 15% in frontier markets. If his India, China, and Europe holdings have not done well, he has still done well in our markets. That diversification is exactly where we come in.
Hugger: Low correlation also reduces the overall risk of a portfolio.
Is diversification one of your key selling points?
Hugger: It is difficult to say. For big institutional investors and family offices it is certainly a hot topic, but they also want great performance, which is still important. For indi vidual high-net-worth investors, I think the diversification aspect matters less. They normally want a story, more meat on the bone: why should I invest in Asian frontier markets and not in China or India? We need to explain that. And there is always the view that frontier markets are risky.
Of your institutional, family office, and individual inves tors, which make up the larger part of your $125 million in assets under management?
Hugger: Definitely high-net-worth individuals (HNWIs) and family offices. That is basically our base so far, which is why this deal helps us a lot. We are only $125 million, which is nothing in the US or even in Europe, but it is a lot of money for frontier markets. With this deal, we can go to investors and honestly say we are part of a $1.3 billion group. That will certainly help in selling our funds to institutional investors. It makes it much easier.
What synergies might you unlock from this partner- ship for CAL over a longer period?
Mannakkara: There are three elements. The first is investment opportunity origination, which is the research that finds a really great stock, or a corporate finance transaction you bring to the table that didn’t exist before. Then there’s the investment platform. That is AFC. Finally, we have the key element, which is distribution, where you get to invest off that.
Match all three, and you end up with an end-to-end transaction that brings capital into a frontier mar- ket. You clip fees from it, obviously. Then you get the machinery moving, and that is capital allocation, which we are so passionate about.
In the longer run, AFC has a very interesting net- work of 20,000 people it reaches out to regularly, and that network can distribute all sorts of things. AFC has been in business for over 13 years, and Thomas has been involved in this maybe longer than he cares to admit. Over the years you develop a varied network of contacts, and all of that can help drive value.
There is also another aspect of distribution that many global funds don’t get to tap: the money that exists within frontier markets and needs reinvesting. Capital controls make this dependent on the country, but CAL has shown that we can create over a billion dollars of AUM in a hundred-billion-dollar economy. Vietnam is a $500 billion economy, and so is Bangladesh. If you could start unlocking some of the value in these places, how much could you develop? What we have shown is that if you give people a good, interesting value proposition and make it seamless and easy to invest, they need that. It is how people build their wealth. So there is an opportunity for both sides.
Finally, finding the opportunity is as important as finding the investor. Having boots on the ground and product creation capability gives us a firm edge in identifying potential investment opportunities: what to invest in, where to invest and when to invest.
In these markets, is it possible to deploy leverage in addition to the funds you have under management? Hugger: It is definitely possible to deploy leverage, but so far we have not done it, for a very simple reason: nobody knows AFC. To the banks, we are small potatoes and nobody cares to deal with us. That is also an advantage with CAL since we are now part of a bigger group with more muscle, and we bring more to the table. Hopefully, in the future, we can launch strategies where we can deploy leverage.
Mannakkara: We would have to float a separate fund with a clear leverage mandate. Leverage often works well with fixed-income products like bonds, and equities work as well, but leverage needs liquidity in the market. You can’t do a leveraged Uzbekistan fund because there isn’t enough liquidity, and you probably don’t need one because the market movements are already big enough. But bond trading in a relatively more liquid market, say Vietnam or Sri Lanka, could become very interesting with some leverage.
How would you then deploy it?
Mannakkara: It is the fund that sources the leverage, and the assets back it.
Hugger: We would need to find a bank willing to lend money to the fund. The funds are legally based in the Cayman Islands, not Hong Kong, although our investment manager is in Hong Kong. That structure isn’t a problem for lenders, because banks and investors in Hong Kong and Singapore all know the Cayman Islands well.
If CAL starts borrowing money to invest at some point, would that make it more like hedge funds, which often borrow heavily to back their bets?
Mannakkara: It wouldn’t be a big jump. AFC pitches to accredited investors, so it is not a broad mandate that takes money from daily wage earners. We are already playing in a niche space. Frontier, by definition, is a niche. It lies at the edge of the market.
The most important thing is that it is a sliver of a sliver, but it is still an enormous amount of money. I keep telling people that the move from frontier to emerging is such a big gap. In a place like Bangkok, daily market turnover is a billion and a half dollars. Here in Colombo it is $5 million, and we are happy when it is $20 million. Bangladesh is happy when it is $100 million. The world is a much bigger place than all of this, so you only need a very small sliver to make frontier markets boom and be very exciting.
What are the big factors that matter in frontier investing that might not matter with the same weight in usual investing?
Desai: For our regional fund, we choose the countries first, then the companies. We do that because we don’t protect the fund against currency swings. That kind of protection is either too expensive or simply not available in these markets.
If one company has a bad quarter and its shares drop 10% or 15%, I’m not too worried. We plan to hold our stocks for three to five years, so a short- term wobble matters little. What worries me is a country’s currency falling 30% or 40%. We invest in US dollars, so when the local currency collapses, our investment loses that value too, however good the company is. That is the loss we most want to avoid
In 2022, Sri Lanka, Pakistan and Bangladesh all saw their currencies drop sharply. We were lucky to avoid some of that.
That is why we pick countries first. We put money into countries where the economy looks healthy, or where it has hit rock bottom and is about to recover, as Sri Lanka was at the start of 2023. We stay away from countries where the economy is weak or heading downhill.
To judge that, we keep a close eye on a few things: the currency, how much the country earns from abroad compared with what it spends, how the gov- ernment manages its budget, its economic policy, and when elections are due.
Elections matter a great deal. Ahead of a vote, governments often spend more than they can afford. That pushes prices up, and the central bank may print money to pay for it, which weakens the currency.
The good news is that our countries have been through a rough few years and are coming out stronger. I don’t see a big currency fall coming, or a repeat of what happened in Sri Lanka in April 2022, when interest rates jumped by seven percentage points overnight. I don’t think we are in that situ- ation now.
Is it more important as a frontier investor to have a very solid grasp of the top-down view than it would be in an emerging or more mature market?
Desai: I would not say you need a strong grasp. As long as you know the basics of macroeconomics, you should be fine. But it definitely matters more in frontier markets, because these things can swing quite often, as we have seen with the South Asian frontier countries over the last few years. Keeping track of inflation, interest rates, foreign exchange, and the election cycle is very important. The political situation is equally important compared with other emerging markets.
“We are only $125 million, which is nothing in the US or even in Europe, but it is a lot of money for frontier markets. With this deal, we can go to investors and honestly say we are part of a $1.3 billion group. That will certainly help in selling our funds to institutional investors.”
In frontier markets, if a country’s economy is in bad shape, doesn’t that matter more than finding a good company?
Desai: That’s true of emerging mar- kets in general, not just frontier ones. India is a good example. Its economy has been steady for years, yet its stock market has done badly. A healthy economy doesn’t auto- matically mean rising share prices. That is why we start by choosing the right countries, and only then look for the right companies within them. Pakistan was trading at four or five times earnings in mid-2022. You could have bought a cheap com- pany at five or six times P/E, but the stocks did nothing for almost a year because the currency devaluation had not yet happened and the IMF programme was not in place. So you have to wait. You take a call on how far the currency should devalue and whether the IMF programme will happen soon, and you go in once all of that has happened.
To give you another example, we invested more in Pakistan and Sri Lanka in the first half of 2023, once the devaluation was through in both countries, the IMF programme was in place and we believed interest rates had peaked. Eventually interest rates come off, which is very posi- tive for stock market returns. At the end of 2022, our combined weight in Pakistan and Sri Lanka was 7–8% of the Asia Fund. We increased it in 2023 and 2024. As of the end of September, on a combined basis, Pakistan is about 14% and Sri Lanka about 10–11%, so about 25% in total. We have gone from 8% to about 25%.
This is an ongoing evaluation, but how do you view Sri Lanka’s investment prospects from the point of view of a typical investor in AFC? How would you pitch Sri Lanka right now?
Hugger: We already have a decent allocation at $3 million out of the Asia Frontier Fund’s $30 million, and we intend to increase it. The most important thing is that we also send the message to inves- tors that the country is stable. If you talk about Sri Lanka, people will point to the negative news coverage they have seen. With HNWIs and private persons, especially, we need to educate them about the situation on the ground and what it looks like.
Sri Lankan shares are priced at about nine times what the companies earn in a year. As a fund manager with other places to invest, how does Sri Lanka look to you?
Desai: From a valuation perspective, it’s very attrac- tive. Adding to Thomas’s points and to the question about Sri Lanka’s prospects: given the situation the country was in between 2020 and 2023, it has made great strides macroeconomically and politically. Returns for us have been very strong. We added weight to Sri Lanka a few years ago and have done exceptionally well in our stocks there.
Taking a longer-term view of 3–5 years, the most important thing for Sri Lanka now is to maintain the stability, policy continuity and policy certainty that have come in the last two years. As long as that continues, you will see interest from us and from other investors.
On valuation, before 2018 the market multiple for the whole index was about 14–15x. Now it is about 9x, so multiples have de-rated across the board. Commercial Bank of Ceylon was at 1.2x price to book and is now at 0.9x. But fundamentals, in terms of return on equity and profitability, have gone back to where they were before the crisis. The valuation hasn’t recovered, perhaps because confidence has to return among investors that Sri Lanka will sustain its macroeconomic and political gains. If that holds, I won’t be surprised to see the market multiple go from 9x to 11x or 12x over the next couple of years. Overall, I am broadly positive on Sri Lanka.
“The Vietnam fund is the largest because of investor interest. Vietnam is the most talked- about market in the media: supply chains are relocating from China, Samsung is moving into Vietnam, and Apple is expanding there too. Everyone is benefiting from that shift, so investors want exposure to it.”
One notable issue for me is what is happening in the Middle East, which is my biggest concern from a geo- political perspective. I am not con- cerned about the Sri Lankan macro position itself, because it’s never been stronger. The current account is stable, there is a primary surplus, foreign exchange reserves are doing well, tourism is doing very well, and the Port of Colombo is at full capac- ity. In the near term, what I will be concerned about is the Middle East and its impact on oil prices. If that clears to some extent, I would not be surprised if the market re-rates in 2027.
You have country-specific funds in places like Vietnam. Is it fair to say that the quality of management at top Sri Lankan companies is better than in those markets?
Hugger: Definitely, yes. We have had bad experiences with management in Vietnam, especially when dealing with them by phone. Pakistan, on the other hand, is good, specifically the top blue-chip companies and their top management.
Desai: I would say the corporate governance in Sri Lanka is top class. The good thing about investing in South Asia broadly is that these are English-speaking countries. Filings are in English, and when you speak to management, they are well educated and speak good English, so you can communicate properly.
Hugger: South Asia also has good corporate governance, common law, and an understanding of the law.
Desai: Everyone loves talking about Vietnam, but I think the corporate governance of blue-chip companies in Sri Lanka or Pakistan is better than in Vietnamese companies.
Hugger: For context, our Vietnam fund is around $57 to 60 million now, down from over $70 million before.
Desai: Over the last two years, though, the AUM growth has come from our Asia Frontier Fund and our Uzbekistan Fund, where we have seen the most investor interest. Performance has been strong, and Uzbekistan’s economy is doing very well. The Asia Frontier Fund also invests in Vietnam, but it covers South Asia and Central Asia as well, and all these economies are doing well.
The Vietnam fund is a significant portion of your funds. Does the amount of money invested there suggest that market depth and liquidity are the reason?
Desai: The Vietnam fund is the largest because of investor interest. Vietnam is the most talked-about market in the media: supply chains are relocating from China, Samsung is moving into Vietnam, and Apple is expanding there too. Everyone is benefiting from that shift, so investors want exposure to it.
You would pay approximately $2.5 million for a controlling stake in AFC after regulatory clear- ances. What will success look like for CAL in five years?
Mannakkara: I see the potential for AFC to grow quite significantly, both organically and inorganically, as a fund management platform, if it takes on some of the opportunities out there in the frontier space.
As Group CEO, I’d be interested in any opportu- nities created by the combination of AFC’s capa- bility and CAL’s. If we start seeing deals originated in Bangladesh or somewhere else get distributed through AFC’s platform to investors in Finland, say, with CAL being part of those transactions, that would tell me we have unlocked something special.
AFC has experience in around 15 markets. Do you see CAL venturing into these markets by itself, in addition to what you would do with AFC?
Mannakkara: Yes. Post-transaction, AFC and CAL will be part of one whole, but I differentiate them. It is almost like parts of a supply chain, though we are talking about finance. In tangible product terms, AFC sits closer to the consumer; we are talking about the global consumer. The operations we have in each frontier market become the supply chain, where we source transactions and pass them on. Those two have to work hand in hand.
My interactions with AFC opened up my perspective on where the opportunity lies. In addition to the Indian Ocean Rim, there are opportunities further afield that we hadn’t thought about and that are also very inter- esting. We have discussed Uzbekistan and Vietnam, and we haven’t talked today about Mongolia and the other places with interesting geostrategic locations and specific growth stories coming up. In almost all of these places there are not enough providers who can bridge capital needs and capital availability.
What final thoughts would you like to share?
Desai: Frontier markets are a very exciting place to be. I have never been more bullish on frontier markets, or at least on Asian frontier countries. They all went through tough times over the last few years, but they have taken the hard measures and made the tough decisions to reform and stabilise their economies, and politics is stable. The platform is the strongest it’s ever been for growth, and valuations are attractive. Our fund has doubled over the last four years. I would not be surprised to see double-digit annualised gains in dollar terms over the next 2–5 years.
Hugger: Frontier markets have been out of favour since 2017, and it is time for international investors to rediscover them. It just needs one big call from a prominent person or organisation to start an avalanche. It is the opposite of a football stadium. When you go into a stadium, you have 90 minutes or two hours to get in, and when the game is over everybody wants to get out. Here everybody will want to get in, but the doors are so small.
Mannakkara: This is one of the most exciting times for me in the last several years at CAL. It is an investment opportunity, of course, but more than that, it is an oppor- tunity to work with some very interesting people. The energy in the office in the last two days since I announced this has been very interesting. Thomas and Ruchir have fitted in with us like a glove. We breathe the same air, but we also perceive it in a similar way. It is not that we have similar investment strategies; that is not the point. It is that we have shared values, shared ethics, and a shared way of approaching things. I look forward to spending more time with these folks and learning from them.