Africa Opportunity Share Discussion Threads

[jonwig] 16/8/2008 07:51

Not one I'd like to live in (at my age!!) but - see post #8 - the frontier is where the opportunities lie (2% of my portfolio).

[maxk] 15/8/2008 19:55

Can you name a single stable African economy jon?

[jonwig] 03/7/2008 19:54

LSAF chart:

[jonwig] 28/6/2008 12:46

Cantos interview, 26/06/08, transcript:

Africa investment - why it's no fad

Hello and welcome to the market brief. There's been a growing interest in the potential for investing in Africa for some time but it's been mainly focused on the equity and resource area. Today, we're going to be taking a look at the opportunities within the debt market and we're joined by Kevin Colglazier, the Chief Investment Officer of Standard Asset Management.


Q.
Kevin, first of all, if I could talk to you about the potential you see for the region. Just how big do you think it is?

A.
I think it's a very strong case. It's not a fad. I think it's here to stay. I think the market is waking up to the changes that have occurred in Africa over the last 10 or 20 years, underneath the headlines of Zimbabwe or the Kenya elections, and things like that, but to some broad-based political stability, some slow and steady economic growth and a tailwind being provided by the commodities market. And equally, I think most investors are keen to invest in emerging markets in an early stage if they get the opportunity. There aren't that many frontier markets left in the world. The world is pretty well covered by emerging market investors. And Africa probably represents one of the last frontier markets where investors can effectively get in on the ground floor.



Q.
Now you alluded to some of this already, but critics always point to the international and political instability in the region. How would you address those concerns?

A.
Well I think there are two issues. One is, you can't have your cake and eat it, too. You can't want to invest in a frontier market and then expect it to have economic or political stability like Western Europe. So the political risk is always going to be higher. And the second is, I think that Africa gets somewhat of a distorted image, in the sense that, again, the Zimbabwe elections, the Kenya elections, really consume the headlines. What doesn't get mentioned a lot are peaceful, normal government elections in various countries, better economic progress (African GDP is very strong), nice growth numbers. Those sorts of things don't really make the headlines. It's more the negative news, which I think is, to some degree, exaggerated and somewhat skewing some investors' opinions.



Q.
Now there have been a few African equity funds launched recently, but what are the distinct advantages of investing in the debt market there?

A.
The debt market gives you access to companies that may or may not have equity listings. So it gives you opportunities to get into investment opportunities that may not exist in the equity market or the private equity market. And the from the company's point of view, not all companies have or want equity listings. Not all companies have or want private equity investment. Particularly in more developed markets, debt is a completely logical part of a company's capital structure. And I think that it goes both ways. It gives the investors opportunities to get into investment opportunities they may not have on the equity side. And from a company's point of view, it gives them another avenue of raising capital.



Q.
And as you look across the region, are there any companies that seem particularly attractive?

A.
Well the fund we're talking about is very bottom-up driven. Having said that, though, I think that, clearly, there are three zones that are very attractive. Obviously, there are a lot of positive things going on in West Africa, particularly Nigeria and Ghana. East Africa, as well - Kenya, Tanzania, Uganda. And then the area around South Africa. The fund will not invest in South Africa yet but in sub-Saharan Africa, ex-South Africa. There is a lot going on in the area bordering South Africa. Surely there must be some interesting things to be done in Angola, because obviously the commodities boom. I think Mozambique, for different reasons is kind of interesting as well. And I think there are a lot of interesting things that are being done right now in the CFA zone, the French-speaking part of West Africa.



Q.
That's quite a broad spread.

A.
Yes.



Q.
So what sorts of returns can investors expect to receive from the African debt market?

A.
We would hope that in this fund, that the equity investors would achieve something around 15 per cent per annum after fees.



Q.
Now you said that the Standard Africa Development Fund is amongst the first dedicated sub-Saharan fixed-income vehicles. So just how receptive are companies in the region at tapping this different kind of funding?

A.
It goes back to what we were saying earlier, in terms of debt is a completely viable way for a company to raise money. We see that in the US and Western European markets and the Japanese market all the time. And again, not all companies have access to or the desire to have listed equities. Not all companies have access to or the desire to engage in private equity-type transactions. And in some cases where it's a relatively defined type of capital expenditure, then borrowing money makes perfect sense.



Q.
So just to sum up a few of the things that we were talking about, just how much potential is there for growth in the region in the coming years?

A.
Again, as we were saying earlier, some of the negative news is, to some degree, hiding some of the very positive economic news that's going forward. African GDP over the last five years has been very strong. It's been well in excess of what we see in the developed markets and one of the leaders in emerging markets. There is obviously a commodities tailwind that's occurring in many countries in Africa, both obviously on the energy front, but also in metals. There is obviously agricultural expansion going on - the global demand for food, Africa is a very fertile place. I'm trying not to put a number on it because it's a continent, it's not one country. And obviously the different countries are very disparate. But I think we should continue to see decent, strong GDP growth out of the region, as a whole.



Q.
Thank you very much.

A.
All right. Thank you for your time.

[jonwig] 14/6/2008 09:50

Another USD denominated Africa Fund on AIM is PMEA (PME African Infrastructure Fund).

Current (27/06/2008) MCap is $180m, NAV $174m (31/12/2007, all cash) with some deals in the pipeline.

[jonwig] 10/6/2008 17:27

"... on 5 June 2008, Robert Knapp the Chairman of the Company, purchased 260,000 ordinary shares of $0.01 each at $0.93 per share. Following this purchase, Robert Knapp has a total of 2,760,000 ordinary shares representing 2.2 per cent. of the Company's total voting rights."

Following on from:

"...on 21 May 2008 Robert Knapp the Chairman of the Company, purchased 500,000 ordinary shares of $0.01 each at $0.935 per share. Following this purchase, Robert Knapp has a total of 2,500,000 ordinary shares representing 2 per cent. of the Company's total voting rights."

Not insignificant spends on both occasions.

[jonwig] 21/5/2008 19:18

Might be interesting to watch this, having just invested in New Star's Heart of Africa OEIC.
There can't be many macro opportunities sitting unexplored, but Africa could be one of them.

EDIT: bought a few.

[jonwig] 21/5/2008 19:16

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hxxp://www.africainvestor.com/default.asp

hxxp://www.frontiermarketsfund.com/ - major shareholder in AOF

~~~~~~~~~~~~~~~~~~~

Significant shareholdings Total 42.63m shs:

Advance Frontier Markets ... 10,754,212 25.23%
Robert Knapp* ............... 8,313,000 19.50%
Lazard A M .................. 5,084,941 11.93%
South Yorks Pensions ........ 3,600,000 8.45%
Francis Daniels* ............ 2,112,827 4.96%
Laxey Partners .............. 1,000,000 2.35%
Christopher Gradel* ........... 250,000 0.59%
Christopher Agar* ............. 100,000 0.23%
Myma Belo-Osagie* ............. 100,000 0.23%