Phnom Penh-based private equity firm Leopard Capital completed its second and third deals last month, including a $1 million investment in a consortium group whose implementation of a transmission and distribution system 120km in length, which includes medium and low voltage networks, will provide grid power to 7,700 residential customers and 375 commercial and industrial customers (per reports, the electrification rate in Cambodia is currently one of the lowest in Asia and such there is pressing demand for more power generation and transmission). Herein linked is an interesting interview with Douglas Clayton (pictured left), Leopard’s founder who made headlines in March 2008 for launching the first-ever Cambodia-dedicated investment fund with $27 million in capital that he raised through vigorous pitching of the country’s fundamentals, a coup in and of itself given the times and particularly for a fund dedicated strictly to what Clayton admits is a “failed state that’s back on its feet.” Yet the long-term growth potential, Clayton explains, should suit forward-looking investors:

“[Cambodia] is a country that has many business opportunities. In most countries, there will be rental car agencies, there is a bus pickup to town, but there are not in Cambodia. Many other Asian cities have this, but Phnom Penh doesn’t. Secondly, we have a very young population here. The average age in Cambodia is 21, unlike many western countries, where the average age is 40, the time that you get ready for retirement. Cambodians are just ready to go to work.”

Leopard and competing funds will look to move money into banks, office buildings, luxury hotels, ports and other projects, according to analysts.

In a New York Times feature on investment in the country from last year, another fund manager, Marvin Yeo of the Cambodia Investment and Development Fund, echoes Clayton’s assessment, citing the country’s “young and inexpensive work force, rising productivity, a pro-business government, stable politics and strong GDP growth, which peaked at 13.5% in 2005 but was expected to mellow to 7-8% in coming years.” Clayton theorizes as to the presence of Cambodian stock and bond exchanges by year’s end, citing the growing array of foreign-sponsored companies, including banks and cellphone operators, as well as agribusiness. And FDI from the likes of China, South Korea and Malaysia is now in the billions. Such investment relies on the country’s oil and mineral resources and is helping to reduce the country’s dependence on clothing exports and tourism.

That said, serious questions remain. Crony capitalism, a questionable legal system and accounting standards, as well as rampant corruption (Cambodia ranks near the bottom of Transparency International’s corruption perceptions index) are all cause for concern. Yet the seeds for continued market reform are certainly in place. The ruling Cambodian People’s Party and the main opposition Sam Rainsy Party are “committed to the same pro-business, pro-growth policy platform,” according to Cambodia Investment.

Finally, some pretty big names among international finance are on board with the message as well. According to Jim Rogers (who along with Marc Faber and several others, sits on Leopard’s board), for instance, “Cambodia does have a lot of natural resources, it does have an ambitious population, and it does have some assets. Most countries that come out of something like they have are inclined to be pretty safe for a while because they’re trying to get money in.”