When investors start out, most say to themselves “I have a long-term plan”. But just as often, our thinking about what is long term changes as soon as we experience the first market dip. Faced with volatility and uncertainty, our first impulse is to flee to safety.
The scale of the impact of Covid-19 on the global private equity market is uncertain. December 2019 ended a very strong decade for private equity encapsulated as a period of remarkable growth with overwhelming fundraising figures and outperformance of public markets. There was a bright path ahead - yes, private equity had seen its spike in growth, but now was a time for real consolidation, a time to focus on operating models, ESG and diversity, growth of the secondaries market to bring liquidity into private equity and increase capital flow to new jurisdictions. – all in all, an exciting decade ahead of sustained and sophisticated growth.
AVCA has recently published a report entitled Raising the Heat: Exploring Climate-Consciousness in African PE, which includes a survey of the Association's member firms on how they are responding to climate change and its risks. AGF speaks with Enitan Obasanjo-Adeleye, Head of Research and Training, AVCA, about the findings, the implications of climate change on Africa's PE ecosystem and more
There is no doubt that global capital flows will be impacted by COVID-19. Emerging markets in particular are facing a severe slowdown in economic activity from lockdown implementation measures, as well as navigating to avoid a potential health crisis resulting from the outbreak of coronavirus.
In our March market commentary, we argued that the sharp intra-month rise in market yields had gone too far. Although the investment theme deteriorated in a significant way, it appeared that the market, at that point, had discounted a lot of the negative news flow. This view turned out to be correct, not just for April, but also for the month of May. During May, the majority of the RSA Government nominal fixed-rate and inflation-linked bonds ended the month at lower yields. In the nominal bond market, and in contrast to April when short-dated bond yields declined sharply and led to bullish yield curve steepening, the decline in yields was more evenly spread across the curve during May. In fact, yields at the short end of the yield curve pulled back from their intra-month low levels in response to a smaller than expected repo rate reduction of 50 basis points (bps) by the South African Reserve Bank (SARB). More specifically, nominal fixed rate bonds in the 7 to 12-year maturity band of the All Bond Index (ALBI) rendered a total return of 13.04%. This was well above the total ALBI return of 9.56% and a long way away from cash and inflation-linked bonds.
Since the outbreak of Covid-19 asset classes have tumbled globally. Modern portfolio theory always dictates that a well-diversified portfolio should have a mix of asset classes that diversify the risk / return profile over time. However, in periods of market shocks and fast-moving markets on the downside we see much more auto correlation between asset classes. That is, they all behave similarly in varying degrees which, in the short-term, confounds the diversification principle.
Old Mutual Alternative Investments (OMAI) is one of Africa’s largest alternative investment managers with over $4.1bn under management in infrastructure, private equity, mezzanine debt and impact funds. OMAI is a member of Old Mutual Investment Group, the South African investment management arm of Old Mutual. The company chooses to make a positive impact across Africa by going ‘Beyond the Obvious’ to uncover opportunities others may overlook, according to Paul Boynton, Joint CEO. Paul has been Head of Alternative Investments since 2004. He chairs the Alternative Assets Investment Committee and has served on the boards of African Infrastructure Investment Managers, Assore, African Clean Energy Development, CIT, J&J, Life Healthcare, Metcash, Mezzanine Partners, Old Mutual Investment Group, Pepkor, Tourvest and Phembani.
AGF’s Anna Lyudvig speaks with Rajaa Berrkia, Sustainability Director, Mediterrania Capital Partners about trends around sustainable investing, the firm’s approach to sustainable investing as well as recent investments and achievements
The local and global economic outlook is bleak, yet the same may not be true for markets. Investment firm RisCura recently hosted a webinar with leading investment specialists in order to get their views on Covid-19 and its impact on markets, the economy and society.
Tighter yields and strong competition in traditional markets have prompted European institutional investors to slow down in deploying their capital, despite having accumulated record levels of investable capital in recent years.
The Moody’s downgrade of South Africa’s credit rating should have happened long ago. We’ve known for a long time that our fiscal metrics have been unsustainable, so despite the coronavirus, this is unsurprising.
The below is the edited version of the Webinar presentation by Murega Mungai, Nairobi-based Trading Desk Manager for AZA, Africa’s biggest non-bank currency broker. For the recording, please click here: https://www.azafinance.com/how-african-businesses-can-survive-covid-19/