By David Rosensweig ’07, Bottom Line.

 

On May 30 this year, an American military cargo truck lost its brakes, crashing and killing 5 people near Kabul, Afghanistan. An angry crowd began stoning Afghan police and American soldiers, who allegedly fired shots into the crowd, sparking thousands of people to rioting and setting fire to shops. The government imposed the first curfew in four years.

Christian Lee '07 was in Dubai that day, on his way to Kabul for a summer internship. He considered turning back for the U.S., where his wife had stayed. Christian spent the summer as an associate with Acap, manager of Afghanistan's first private equity fund. "There's the random stuff that you can't control - you know, the bombs, the rockets. But if you're smart about where and who you go out with, you can mitigate some of the other risks - like the kidnappings."

As Christian said this over coffee in Uris deli, in comfortable jeans and blue polo, Kabul seemed a world away. Christian worked in investment banking and corporate M&A after college. He was interested in applying what he'd learned to emerging markets and private equity seemed a great way to do it. Acap's founder was a McKinsey consultant working on an economic development project for the Afghan government when he decided to start a private equity fund.

Investors in the fund include international aid organizations and high net-worth individuals. The fledgling Afghan economy needs private investment to build basic infrastructure for all sorts of industries, like agricultural processing, carpet making, consumer goods, and retailers. Investing in Kabul brought entirely different worries than one might have in the U.S. - does a company's site have electricity and water? Can you trust the founders, especially without Western style legal protections?

Is a factory located in an area where they detonate unexploded land mines or do snipers use the rooftop for target practice? (Both of which Christian found on a due diligence visit for a flour mill.) One difficult aspect was getting entrepreneurs to forecast their businesses and think with a long-term investment perspective. "Afghans are very good at trading," Christian said, "but after 24 years of war, 6 months or 12 months is an eternity."

Acap invests $500,000 to $5 million in each investment and is looking to hire a full-time associate and, each year, a summer associate. Columbia Business School's Social Enterprise Program helped fund Christian's summer work with a CORPS Fellowship.

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