Investec AM launches liquid fund to access African growth
For investors wishing to benefit from the opportunities and growth presented by Africa, yet concerned about the liquidity constraints often typical of equity listed on African Stock Exchanges, Investec Asset Management will launch the Africa Opportunities Fund on 29th September to provide a liquid and actively managed vehicle through which to access the African growth story.
Investec Asset Management has been a pioneer in investment in Africa. Founded in South Africa, more than 50% of total assets under management are invested on the continent. Investec Asset Management is one of the largest managers of third party assets in Africa.
“We have achieved success for our clients in both our listed and unlisted investments since first launching the Investec Africa and Pan Africa Funds in 2005,” said Chris Derksen, Head of Frontier Markets at Investec Asset Management.
The Investec Africa Opportunities Fund, managed by Malcolm Gray, addresses liquidity constraints by constructing the portfolio with a bias towards more liquid South African, Moroccan, Nigerian and Egyptian markets as well as to stocks listed on various international exchanges which have a significant exposure to Africa. All stocks within the investment universe will have a minimum market capitalisation of $100million.
The fund will be daily traded and will have a minimum investment level of $3000.
“Over the past decade, Africa has undergone lasting and fundamental changes. Africa’s politics are increasingly democratic, its fiscal discipline and sovereign governance are improving, conflict zones are declining and free market principles are increasingly being implemented. Against a backdrop of growing international demand for Africa’s resources, it is little wonder that Africa has outstripped global GDP growth for the past decade. We believe there is an opportunity to invest in businesses at valuations that undervalue their exposure to improving African fundamentals, and whose equity is often listed on international exchanges with commensurate liquidity benefits”, he added.
“Key to our investment process is to identify companies listed on both African and world exchanges that are exposed to the African growth story, its key themes and where a significant portion of their current or future value accrues from the continent,” Gray says. From a universe of around 200 stocks, the portfolio will typically comprise around 30 stocks.
Stock-specific risk is reduced through on-the-ground analysis conducted by the 27-strong frontier investment team and limits on exposure to an individual stock. “As one of the largest managers of third party assets in Africa, Investec Asset Management is able to conduct company and country visits regularly as a part of our investment process. Our scale as a significant shareholder across the board in Africa ensures consistent access to management and information,” Gray says.
Given the Firm’s established history in Africa, investing on the continent is considered a core capability of Investec Asset Management. Investec Asset Management has built comprehensive investment capabilities for its clients in both public and private equity, and public and private debt.
