Swedish hedge fund Moghul upbeat on B'desh economy

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Patrik Brummer, chairman of Brummer & Partners

A Z M Anas
Bangladesh's "less volatile" economic development will help it travel to a sustained path of growth, driven by a dynamic pool of private entrepreneurs, the head of Brummers and Partners said.
Patrik Brummer, chairman of Stockholm-based hedge fund, said the relative insulation from the world economy has guarded it against the global recession, while enabling its economy to roar ahead.
"Growth will increase. This economy can keep growing," Mr. Brummer told the FE during his recent visit to Dhaka.
"I'm a strong believer in the prospect of Bangladesh. Lots of entrepreneurial spirits and successful enterprises are here," he said.
His comments came as Bangladesh economy managed to grow a healthy 5.9 per cent in 2009 financial year, defying the worst economic downturn in generations.
Over the last 10 years, Bangladesh's private sector-led economy has been chalking up growth of 6.0 per cent a year and, Mr. Brummer said, it has proved its economic resilience in the last eighteen months, too.
The financial markets crashed, jobs disappeared and growth took a sharp dive in much of the developed world and its ripple effects were felt in other parts of the world. The current crisis, originated in the US in September 2008 on sub-prime mortgage problem, reverberated on poorer nations, but Bangladesh was largely saved.
"This economy is creating jobs, which is more difficult in other parts of the world," Mr. Brummer said.
In an interview with Bloomberg, Brummer's top boss unveiled a plan to set up about US$100 million funds to snap up stocks in Bangladesh-not so large as nearly one-third of local companies are publicly traded.
The Dhaka Stock Exchange General Index, which gained 21 per cent this year, eclipsed its previous high reached in 1996 as shares of GrameenPhone Ltd, Bangladesh's largest mobile-phone company, almost tripled on debut on November 16.
GP, majority controlled by Norway's Telenor, raised Tk. 4.9 billion in what became the country's biggest initial public offering.
Between 2007 and 2009, the stock market's daily turnover surged by five times to about $100 million, an analyst said.
Mr. Brumnmer said his fund, which is managing more than $ 7.0 billion in assets, would invest equities in Bangladeshi private companies that require capital to expand.
"We'll contribute to companies not only in terms of capital but also corporate governance. It's a long partnership-may be five to eight years," he said.
Private equity is still a virgin area in Bangladesh's financial landscape and experts say it has the potential to grow 1.0 per cent of Gross Domestic Product (GDP).
He noted that there was a "tremendous" opportunity in Bangladesh for private equity firms to gain roots.
In July 2008, the manager set up a fund to invest in stocks and private equity and has already invested in Rahimafrooz Group's battery and retail businesses.
It is also an investor in bracNet, a wireless broadband company, which has tied up with KDDI Corp, Japan's second-largest mobile-phone operator.
Mr. Brummer said his Bangladesh unit is looking at "quite a few sectors in the country not most capital-intensive."