ACO Investment Plans $700 Million in Myanmar Private-Equity Bets

Myanmar, the Southeast Asian nation that exited 50 years of military rule in 2011, offers investors the best growth opportunity in the region, said Hari Achuthan, whose firm is betting $700 million on the country.

ACO Investment Group, co-founded by Achuthan and former United Airlines president Ronojoy Dutta, this year aims to invest $200 million in Yangon International Airport and plans to make a $500 million bid for two telecommunications licenses as part of a new global infrastructure fund, Achuthan said.

“What we’re looking for is a frontier market that has a tremendous amount of growth ahead of it,” the former Credit Suisse Group AG banker said in a phone interview on March 15. “In the Asian markets, if you’re looking for growth, we would rather look at Myanmar versus the saturated markets of Thailand or Indonesia.”

President Thein Sein is clearing the way for overseas investment in the country to help speed modernization of its financial system and infrastructure ahead of elections in 2015. The U.S. dropped economic sanctions against Myanmar, stemming from corruption and human trafficking, in July after Sein began a democratic process that elected opposition leader Aung San Suu Kyi to parliament after 15 years of house arrest.

The country of 64 million people plans to award the two licenses by June, the Myanmar Posts and Telecommunications Ministry said in a statement dated Feb. 15 on its website.

Singapore Telecommunications Ltd., Southeast Asia’s biggest phone company, Malaysia’s Axiata Group Bhd. and Norway’s Telenor ASA are among 91 potential bidders for the licenses, the ministry said.

The investment in Yangon Airport may take the form of joint ventures or project financing and includes debt, Achuthan said.

Foreign Investment

After five decades of isolation, Sein in November signed a foreign investment bill to woo overseas corporations into spending more in the former army-run nation. Companies scouting opportunities in Myanmar or striking development agreements include Best Western International Inc., the world’s second-largest closely held hotel chain; Coca-Cola Co., Unilever NV and Visa Inc.

While investing in Myanmar involves political and regulatory risk, the potential return is also much higher, according to Achuthan.

“You’re early to the game and you’ve caught the cycle at the right time,” he said. “Growth is just about to start and the laws are just opening up and not crystallized yet.”

ACO Investment, based in New York, reached an agreement last month with Myanmar’s Mandalay regional government to develop solar energy farms capable of generating 1,000 megawatts of power. The firm will invest $1.5 billion to $2 billion in the project over two years, Achuthan said.

Beyond Myanmar, the private-equity firm is exploring a $500 million solar farm investment and a $250 million wind farm project in Vietnam. He declined to elaborate on the developments or comment on the ultimate size of his global fund. His company is also studying bids for airports in Chicago and Turkey.

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