Investec Asset Management launches African Credit Opportunities Fund
Investec Asset Management is pleased to announce the launch of the first dedicated African credit and debt capital markets fund of its kind globally. The Investec Africa Credit Opportunities Fund 1 is a dedicated closed-ended fund aiming to raise US $350
The fund aims to provide growth capital to African companies, thus offering an alternative to traditional bank funding, encouraging growth and employment, and fuelling the long-term development of Africa’s debt capital markets. This is done by a landmark investment from two established development finance organisations in CDC, the UK’s Development Finance Institution, and Dutch development bank FMO, that sees development capital allocating specifically to African debt capital markets in order to achieve its dual aims of development and return.
“Rising interest in the African investment opportunity has led investors to explore a range of means by which to participate in a multi-year growth story. Africa, with the world’s strongest population demographics, strong GDP growth and improving political governance has been identified as the last investment frontier. The African growth story is apparent; however, the best investment entry point to the growth story has not been so obvious,” says John Green, Global Head of Client Group, Investec Asset Management.
The fund, managed by Investec Asset Management’s South Africa and Frontier Credit team, has been designed with the aim of giving investors high yields, the ability to access the African public and private markets across all sectors, US$ exposure and lower volatility than other risk assets.
Over an 8.5 year term the fund will look to deliver its dual aims of both development and return, primarily through investment in a diversified portfolio of corporate debt. The investment approach aims to provide access to the broadest opportunity set available, locking in high yields and capital appreciation. Risk is minimised through sector, country and counterparty diversification.
The fund’s anchor investors, CDC and FMO, have committed US$60 million to the fund. Other global institutional investors have shown strong appetite for the fund.
Investec Asset Management has developed a broad range of Africa-specific investment strategies within its comprehensive Emerging Markets and Frontier investment capability, spanning public equity, private equity and both sovereign and corporate debt, each designed to offer investors tailored access to the African growth story. Founded over 20 years ago in South Africa, Investec Asset Management has grown from emerging market roots into a global investment manager with an established specialist African investment capability, and remains one of the largest managers of third party assets in Africa. Says Green: “As one of the largest managers of third party assets in Africa, our extensive experience of investing in emerging markets underpinned by our heritage gives us deep insight into the drivers of African markets. We believe that as investment partners we are well qualified to deliver the specialist insight that is required by CDC and FMO for this fund."
Magchiel Groot, Senior Investment Officer Private Equity at FMO, said: "FMO is particularly proud to be an anchor investor, to highlight the Africa opportunity and ultimately facilitate the raising of up to US $350 million for the deployment of debt capital markets in Sub-Sahara Africa. As other African investors are assessing the fund, Investec Asset Management, FMO and CDC have been instrumental in making this largely South - South connection possible for the development of debt capital markets in Sub-Sahara Africa. This is a great example of Africa empowering and funding the growth of Africa".
Jeremy Burke, CDC Investment Director for Debt and Structured Finance, said: "Through this collaboration with Investec Asset Management, CDC will provide growth capital to private sector companies in a wide range of African countries, including some of the poorest. CDC's capital will be spread across various industry sectors and bolster growth and employment across the continent. This will be the first such debt investment under CDC’s recently launched business strategy, which CDC is pleased to be anchoring alongside FMO.”
