In 2016, African Infrastructure Investment Managers (AIIM) sold investments in three privately-concessioned toll roads in Southern Africa to a consortium of largely existing investors including Public Investment Corporation, Liberty Group, Old Mutual and Africa Finance Corporation. The sale, which was structured via the South Africa Infrastructure Fund (SAIF), represents the largest private equity realization for toll road infrastructure in Africa to date.
AGF catches up with Jonathan Kruger, Director and Portfolio Manager at Africa Merchant Capital (AMC) to learn more about company’s Sub-Sahara Fund. The fund was launched in December 2014 as a Cayman Corporate vehicle and has under $5m under management. On a net of fees annualised basis the fund has returned -10.6% USD since inception.
What are the most promising markets and sectors for African investors? Which factors will drive capital markets and PE performance in 2017? What are the best investment strategies? Find out what experts have to say on these questions and more
It has now been two and a half years since the US Dollar began its +25% appreciation and the underperformance of African equity markets feels as if it has no end. Experienced Africa hands say the past period has been one of the toughest (and probably the most disheartening) to their knowledge. Given the record number of fund closures and dismal equity returns since mid-2014 (down 45%), investors are wondering whether Africa really is “reeling” rather than “rising”.
Southern African Private Equity and Venture Capital Association (SAVCA)/ Webber Wentzel PE data for the first three quarters of 2016 shows 140 deals reported across the Sub-Saharan Africa (SSA) region. A third of these were in South Africa, but Nigeria, Kenya and Namibia also featured prominently. Statistics show a significant year-on-year increase in deal flow.
Listed equity markets in Africa (excluding South Africa) present an opportune environment to add investment-alpha (fund returns exceeding the benchmark’s returns). Public disclosures are minimal compared with developed markets, and the research burden of on-site due-diligence is high. These factors lead to relatively inefficient markets, which can be exploited by a skillful manager willing to invest the time and resources required to uncover mispricing opportunities.
Lucid Ventures, an approved FSB -Section 12J Venture Capital Company, has recently completed new investments in the South African hospitality sector. The firm that was launched in early 2016 has been very active in the deal-making scene. It finds no shortage of opportunity in its core focus sectors in South Africa. Africa Global Funds catches up with Jordin Borer, Investment Officer at Lucid Ventures, to discuss new deals and plans for 2017.
Less than a decade after the first, Zimbabwe has experienced its second economic contraction, with the effects of round two being conspicuously similar to those demonstrated in the first round. Supermarket shelves have once again started to empty, some public and even private sector salaries remain unpaid, banking hall queues are getting longer and hospitals are short of basic supplies. Whilst the humanitarian state of affairs is critical we find the socio-economic structures persistently durable, where businesses continue to open their doors and survive, albeit under enormous difficulties. Thankfully many of these surviving businesses (those which remained following the first contraction) have retained their skills and chiselled business physique to survive an economic depression and continue to make profits in a difficult environment.
The 2008 global financial crisis occurred largely due to an increased level of counterparty credit risk and the inability of counterparties to stand good against their obligations. Approaching a decade on, financial market players should be fully aware of the regulatory ramp-ups and reforms being implemented to negate against anything similar happening in future.
Indexation is growing at a rapid pace globally and it is thought that most developed market investors are selecting index tracker funds as their default investment options these days. With data moving more freely and frequently in the world, the range of rules-based and transparent indices being developed have increase rapidly, focusing not only on market cap indices, but also ESG, smart beta and multi factor and multi asset solutions.
As human beings, we are continually evolving and modifying the societal norms that we live under. What would have been considered normal in the last century or even a decade ago can be quite different today. How business is done, from how companies are run to how investors invest in them and engage with them is also evolving and driven by the changes we see in societal norms. We could consider it a maturing of our society. Where we live also has a bearing on that, which is probably why when investing I have always considered some sort of responsible investing, even if the what it is called and how its defined has evolved with time.
Debt capital markets across Africa’s sub-regions have remained robust despite the macroeconomic and political challenges presented, “indicating their growing maturity and depth - along with their ability to develop solutions in the face of volatility and change,” says Zoya Sisulu, Head, Debt Capital Markets South Africa, at Standard Bank.
The King (IV) Report on Corporate Governance for SA, 2016 (King IV) refers to certain “paradigm shifts in the corporate world”, including a shift from short-term capital markets to long-term, sustainable capital markets. The report also notes that the King Committee was requested by many entities outside the private sector to draft the King IV Report in such a way as to make it more easily applicable to all organisations: public and private, large and small, for- profit and not-for-profit. As a result, in order to make it easier for all organisations to use the King IV Report as a guide for good governance, King IV introduces “sector supplements” for the first time. Part 6.4 of the report is entitled “Supplement For Retirement Funds”, and it is applicable to all retirement funds, including pension funds, provident funds, preservation funds and retirement annuity funds, so that for the first time retirement fund governance is directly addressed by the King Committee.
The inaugural AGF Africa Service Providers Awards 2016 were held on October 27 at the gracious Rotunda in Camps Bay, Cape Town. Built in 1904, the iconic Rotunda ties The Bay Hotel to its Victorian roots. Once, the site of early-20th century high society gatherings, the historic venue accommodated Africa Global Funds’ guests for a Gala dinner and Awards ceremony.