Clients often ask us what the catalysts for outperformance will be. Sometimes this refers to outperformance of our funds, and other times to the South African economy as a whole.
Tariye Isoun Gbadegesin, Head of Heavy Industries and Telecoms at Africa Finance Corporation (AFC) explores how development finance institutions can help attract more private investment
There will be no happy new year for Zimbabwe in 2020, with a general consensus that the country is more likely to worsen than improve by even the smallest measure. The key concerns that flow from that are the increased potential for instability and a continuing socio-economic decline that brings intensified challenges for the entire region – specifically neighbors South Africa and Botswana. Nor is there any prospect of a quick fix or even a medium-term improvement.
Growing political stability, domestic demand, and an abundance of natural resources means there’s no shortage of investor interest in Africa. As one indicator, foreign direct investment (FDI) into the region increased by 11% during 2018 – a clear exception to the downward trend globally. Yet while trade and investment opportunities abound, challenges remain, particularly with respect to currency reserves, export diversification and trade and payments infrastructure – not to mention broader economic stability.
The traditional private equity investment model is the blind pool fund, with investors committing capital to a fund for the manager to invest and divest at its discretion, in line with the fund’s investment policy. Whilst this fund model works for many, particularly for emerging managers, managers seeking to deepen their track record or those looking to build relationships with new investors, the option to use alternative models can help greatly. Further, there are growing numbers of investors seeking a greater degree of transparency and control over their investments.
There’s no denying that the current narrative in South Africa is negative. Investment returns have been poor for some time and there seems to be no light at the end of the tunnel appearing just yet. During times like these, emotions can run high and investors can make costly mistakes. It is therefore important to focus on your long-term goals to avoid making panic-driven decisions that could lead to losses down the road. The markets are tough, but remembering a few essentials should see you through.
RisCura’s findings in a private equity (PE) market study dispel the misconception that PE is a new asset class in the East African market.
Recent statistics from the Association for Savings and Investment South Africa (ASISA) show that South African Interest Bearing portfolios attracted the bulk of net annual industry inflows for the year ended June 2019, followed by Money Market portfolios. On the flipside, the South African Equity – General category recorded net outflows.
How does a fund construct its governance model so that it allows investors effective oversight over the activities of the general partner and fund manager, but does not go so far that it ends up jeopardizing the limited liability status of the investors? We explore this important question below.
Responsible investors are becoming increasingly concerned about the impact of their current decisions on the environment they will retire into. Evidence of rapid climate change is stacking up and any investment decision not factoring this in may be short-sighted.
In June, the Institutional Limited Partners Association (ILPA) published the latest edition of its principles under the title “ILPA Principles 3.0: Fostering Transparency, Governance and Alignment of Interests for General and Limited Partners.”
In deal making and M&A advisory, traditionally the space has been dominated by investment banks and the big accountancy firms. These firms have served the sector through corporate finance divisions whereas the investment banks have been among their mainstay business.
A prolonged period of poor performance from the local equity market has left many investors anxious and frustrated. While most understand the importance of taking a long-term view, it’s usually more difficult than anticipated to put this into practice. When the values of investments fall, investors’ gut instinct is to put a stop to it.
Despite ongoing trade tensions with the US, Chinese government policies and proactive market evolution continue to ensure strong opportunities for investment.