January 6th, 2015 by Tom Minney
South Africa’s Public Investment Corporation (PIC) has established 2 funds and plans to invest at least $1 billion into African investments outside South Africa, including R2.5bn ($213 million) in the current financial year to 31 March.
According to South Africa’s Finance Minister Nhlanhla Musa Nene, who is also Chairman of the PIC: “True to the GEPF mandate which requires that we commit 5% of assets under management (AuM) on the African continent, the PIC acted accordingly in the past year. That commitment stands. We have established 2 funds, namely: Africa Developmental Investments and Private Equity Africa, which will assist us to discharge our client-given mandate to invest on the rest of the continent. The commitment to invest in the rest of the continent is born out of a realization that our collective success is premised on economic integration.
South Africa’s Finance Minister – Nhlanhla Muse Nene
Acting CEO Matshepo More
“More importantly, the African economic narration has been positively changing. Over the last decade, the continent’s economic output has tripled, while it is projected that Sub-Saharan Africa will grow at an average of 5% in the coming decade. This growth means that the continent will be the second fastest growing region in the world after Asia. For this reason, the PIC will, in the new financial year, also focus on developmental investments in Africa with a minimum commitment of $500m for developmental investments in Africa and a further $500m towards private equity in Africa. The African story presents the PIC with unique investment opportunities and we are fully aware that part of this strategy should be to grab opportunities in Africa and reap rewards in a manner that promotes inclusive growth and creates decent work for the people of Africa.”
Earlier PIC had established the Pan African Infrastructure Development Fund with a target size of $1bn and attracting $625m of investments in its first year, and set up Harith Fund Managers to manage it.
R1.6trn of assets
The total PIC AuM came to R1.6 trillion ($136bn) according to the annual report for the year to 31 Mar 2014, tabled in Parliament last October. Strong listed equity performance helped boost returns to well ahead of benchmarks (including consumer price index + 3%), and AuM were up from R1.4trn the year before and R1.19trn in Mar 2012 and around R83bn in 1994. Nearly 90% of its assets are from the Government Employees Pension Fund (GEPF), with the rest from the Unemployment Insurance Fund, the Compensation Commissioner Fund and other clients.
Asset allocation at 31 Mar 2014 (NB the annual report also gives contradictory figures on p71):
Asset class %
Local equity 49.11
Local bonds 32.42
Cash & money market 7.12
Offshore equity 3.64
Offshore bonds 1.72
Africa equity (ex-SA) 0.5
The unlisted investments portfolio is divided into developmental investments, private equity and properties. The annual report separates “Africa” from South Africa and the “Africa” developmental investments are focused on energy, transport and logistics, social and infrastructure, water and ICT; private equity to focus on “consumer-driven sectors, other sectors will be viewed opportunistically” and properties are retail, industrial and offices.
The African investment portfolio outside South Africa was valued at R7.9bn ($672m) at 31 Mar and the largest purchase during 2013/14 was $289m for a 1.5% stake in Nigerian listed cement firm Dangote Cement. The first African investment was a stake in Ecobank Transnational Incorporated Ltd.
The PIC also has a strong commitment to investments in economic infrastructure, environmental sustainability, social infrastructure, priority sector (high labour intensive sectors), Small, Micro and Medium Enterprises (SMMEs) mostly in South Africa. According to the Minister: “During the 2013/14 financial year, R11.4bn worth of unlisted investments were approved, of which R4.8bn have already been disbursed. The impact on social returns was significant:
• In excess of 7,805 jobs (directly and indirectly) were created and 78,636 jobs were sustained
• 309 SMMEs have been funded and underwent entrepreneurship training
• The PIC is emerging as a leader in the development of green industries by directly and indirectly funding renewable energy projects that will generate in excess of 1,558 megawatts of electricity.”
The PIC is also supporting black asset managers through training as part of a BEE (black economic empowerment) incubator programme for South Africa’s asset management industry and has entrusted some R50bn of assets to 12 firms. It is also supporting transformation of stockbroking and said it paid 86% of brokerage fees to brokers that met Level 4 or better BEE as classified by the Department of Trade and Industry, and aims to pay 50% of all brokerage to Level 2 or better firms in the current year.
Acting CEO Ms Matshepo More (previously Chief Financial Officer, the previous CEO Elias Masilela resigned on 31 May 2014) said that “developmental” unlisted investments in the year came to R6.9bn and in the current year to Mar 2015 it will invest at least another R2bn in “social and economic infrastructure”.
Profit was R209m (up from R130m in 2013) and 1% of profit after tax is set aside for corporate social responsibility. It has a Corporate Governance and Proxy Voting Policy outlining its shareholder activism and is a signatory to the United Nations Global Compact and the United Nations Principles for Responsible Investing. One example was blocking takeover of listed pharmaceutical company Adcock Ingram by Chilean company CFR “to unlock value using local talent and also to preserve jobs”.
The PIC annual report was reported in South Africa’s Business Day in January and on South Africa Info in October 2014 and the last annual report can be obtained here.
June 26th, 2014 by Tom Minney
Top speakers including Government leaders, policy-makers, bankers, investors and experts will be debating the future of Africa’s debt capital markets on Monday 30 June at the London Stock Exchange. The African Debt Capital Markets ADCM 2014 conference is organized by African Banker magazine. I am honoured to be moderating some sessions.
Among the conference highlights are debates on whether African governments have been using bond proceeds wisely, the future for African bond issuances, local currency markets and the challenges of deepening the debt capital markets. There will be calls for policy-makers to make changes to support securitization and other steps to boost finance for development, jobs and growth, following successes in Asia and the world.
Speakers include the Hon Kweku Ricketts-Hagan, Ghana’s deputy Minister of Finance, and Dr Abraham Nwankwo, Director-General of the Nigeria Debt Management Office and Jaloul Ayed, a former Minister of Finance from Tunisia. There will also be Mary Eduk from the Securities and Exchange Commission in Nigeria, Uche Orji of the Nigeria Sovereign Investment Authority, and Stephen Opata from Bank of Ghana.
Stock exchange leaders include Sunil Benimadhu, dynamic head of the African Securities Exchanges Association and CEO of the Stock Exchange of Mauritius, Moremi Marwa CEO of the Dar es Salaam Stock Exchange and Innocent Dankaine from the Uganda Securities Exchange.
Banks, fund managers and stockbrokers include HSBC, Renaissance Capital, Investec, Ecobank and Exotix and there will be many leading legal and other experts including rating agencies Moody’s and Fitch.
There will be a special focus on the Nigerian Debt Capital Markets. Other panels will cover infrastructure, public-private partnerships, sovereign Eurobonds and local currency markets, shadow banking, Islamic finance, new institutional investor trends, and Africa’s standing among global markets.
For more information, look at the website here.
January 23rd, 2014 by Tom Minney
For the second year running, women hedge-fund managers outperform men on average, according to a Reuters report of a study by professional services firm Rothstein Kass. It quotes Meredith Jones, a director at Rothstein Kass, who said it could feed speculation that women are better investors: “There have been studies that show that testosterone can make men less sensitive to risk-reward signals, and that comes through in this study.”
The firm has its own Women in Alternative Investments Index which includes 80 of roughly 125 hedge funds worldwide run by women. It said that, over the period 1 Jan – 30 Nov 2013, the hedge funds run by women and tracked by the index returned 9.8%, compared to only 6.13% gain in the HFRX Global Hedge Fund index. Over 6 years from Jan 2007 to June 2013, hedge funds run by women returned 6%, compared with a 1.1% loss at the HFRX Global Fund Index.
The Standard & Poor’s 500 stock index gained 4.2 percent during the same time.
Although the hedge fund industry manages $2.5 trillion, hedge funds run by women manage only a tiny fraction. Although some institutional investors such as Connecticut’s pension fund have programs designed to make allocations to firms run by women and minorities, the small size and number of women-run funds has been its own barrier to large investments.
Jones said that an Oct 2013 survey of 440 senior women, including fund managers, investors, and service providers, showed growing optimism about the role of women in an industry historically dominated by men.
April 25th, 2013 by Tom Minney
The Egyptian Exchange (www.egx.com.eg) is busy with workshops for mutual funds, investment banks and managers of investment institutions, aiming to boost trading volumes through better communications between market participants and listed companies.
Trading floor of Egyptian Exchange – Dec 2012 pic: ACMN, Tom Minney
The workshops gave investor relations (IR) officials of the listed companies a chance to present their work plans and investment options and the fund managers could also discuss latest developments and current market variables.
According to an EGX press release, Dr. Mohammed Omran, EGX Chairman, said the EGX is keen to boost stock market liquidity. Fund managers praised the communication with listed companies and said it adds to the disclosure provided by EGX. It gives a legal framework for officials of listed companies to answer questions from the institutional investors.
This is a high priority in the current Egyptian economy where all market participants need to work hard to keep the Egyptian Exchange strong and active capital market in the short and medium term.
October 20th, 2011 by Tom Minney
Pan-African fund manager Finch International Advisors received top honours as its Africa Opportunities Fund was named Africa ex-South Africa Fund of the Year. The award was presented at a Inaugural Africa Fund Manager Performance Awards gala reception on 11 October in Cape Town, South Africa.
Africa FM Editor-in-Chief Antony Ireland remarked, according to a press release from Finch: “Finch Africa has clearly distinguished itself as the best-performing fund in Africa ex-South Africa as it more than doubled the return of the next best competitor. Under the stewardship of highly- experienced CIO Jenni Chamberlain, the fund generated a very impressive +31.01% return and 1.48 Sharpe Ratio over the 12-month period through 30 June.”
Finch CIO Jenni Chamberlain responded: “We are honored to have been selected from amongst such talented African fund managers. This year’s outstanding performance may be attributed to the strength of our investment team as there is no substitution for hands-on experience and local market expertise.”
“We would like to thank Africa FM and Pageant Media for fostering awareness of Africa as a credible investment destination for institutional investors across the globe.”
Todd Moss, Senior Fellow at the Center for Global Development (CGD) and member of the Finch Advisory Board commented, “The award is testament to management’s long experience in the region and the team’s disciplined bottom-up approach. For those looking to add African market exposure, the Finch Africa Fund speaks for itself.”
Finch is a wholly owned subsidiary of Altree Financial (www.altreefinancial.com), a financial services group based in Bermuda and regulated by Bermuda Monetary Authority (BMA) with offices throughout Africa, Asia, Europe and the Americas including Altree Custody Services, trusts, and Securities Africa stockbroker with a main office in Johannesburg.