Archive for the 'Investment Institution' Category
November 29th, 2012 by Tom Minney
New giants are arising in African investments – the domestic pension funds. In Nigeria the National Pensions Commission (PenCom) estimated registered pensions to be worth US$14bn in June 2011, with asset values up by 8% in three months; Namibia’s Government Institutions Pension Fund alone is worth some $6bn; South Africa’s pension funds grew at a compound annual growth rate of 14.3% in US dollar terms over 10 years to December 2010, including over 28% in 2010 and Tanzania’s pension industry was audited at $2.1bn for 2010, and growing by 25% a year.
The number of pensioners is set to soar, according to United Nations figures, as the number of people over 60 years in Africa will rise from 55m in 2010 to 213m by 2050, compared to 236m Europeans over 60 years old by 2050. Current pension funds cover only 5%-10% of Africans ranging from 3% in Niger but it used to be 80% in North African countries such as Egypt, Libya and Tunisia. Pensions are not available at all in some countries.
Regulatory reforms are driving the growth of African pensions. Recent reformers include Cote d’Ivoire, Gabon, Kenya, Nigeria, Senegal and Uganda. Ghana created a National Pensions Authority with a 2010 act. Reform in Kenya, including investment guidelines and a new regulator, resulted in strong growth and good investment returns. Tanzania passed the Social Security Regulatory Act in 2008. The rising pension industry is likely to boost fund management and equity industries, exits for private equity and even to fill some of the $45bn annual funding gap for infrastructure. For instance, In January 2012, Tanzania’s National Social Security Fund signed an agreement to finance 60% of the $137m cost of building Kigamboni Bridge. South Africa’s $130bn Government Employees Pension Fund is a major investor in the Pan-African Infrastructure Development Fund which raised $625m in 2007 and is targeting $1bn on its second offering.
For more details on Africa’s pension industry, please check my article published in The Africa Report magazine and website, here is the link www.theafricareport.com and for brief profiles of 6 giant African funds, check here.
November 2nd, 2011 by Tom Minney
** Save the date: AVCA’s 9th conference will be in Accra, Ghana, from 22-24 April, with extra days for GP and LP training (announced today 2 Nov). More details will be available soon **
The African Venture Capital Association (www.avca-africa.org) and Cambridge Associates (www.cambridgeassociates.com), a global provider of independent research and investment advice, have agreed to work together to provide extensive, independent aggregate African private equity and venture capital benchmark data and statistics to AVCA members and other industry participants.
The 2 organizations will issue quarterly performance data which will include African PE and VC industry returns, compared to other market indices. Returns data will be aggregated to protect the confidentiality of individual funds and their underlying portfolio investments. Vintage year returns and aggregate portfolio returns by industry will be reported where the sample size is sufficiently robust to allow disclosure without compromising confidentiality. Cambridge Associates has been advising institutional and private clients on alternative assets since the 1970s and derives its PE and VC benchmarks from financial information in its proprietary database of institutional-quality PE and VC funds, one of the largest such data repositories in the world.
Michelle Kathryn Essomé, AVCA CEO (see below), commented in a press release: “AVCA is absolutely committed to promoting the dissemination of robust, reliable data on private equity and venture capital in Africa. We are thrilled to collaborate with Cambridge Associates, as they have demonstrated the necessary technical expertise, knowledge of the continent, and global track record to meet this objective. I am confident that this will help promote additional transparency and independent benchmarking to the benefit of all industry stakeholders.”
Cambridge Associates will provide the data to AVCA as a service to its members and the global PE and VC industry overall. Cambridge Associates works closely to grow its coverage of the emerging markets PE and VC industries with the international development institutions that are major limited partners in these markets, and also partners with the Emerging Markets Private Equity Association (EMPEA).
Ralph Jaeger, senior research consultant and co-head of international private equity and venture capital research at Cambridge Associates said: “We are delighted at the opportunity to work with AVCA to broaden and deepen the industry’s awareness of private equity and venture capital in Africa. Cambridge Associates continuously seeks to expand our manager research coverage to create benchmarks that can serve as valuable tools for the industry. Assessing the attractiveness of private equity and venture capital in Africa will allow investors to better identify local and regional investment opportunities.”
AVCA and Cambridge Associates
AVCA is a non-profit association whose aim is to promote, develop and stimulate private equity and venture capital in Africa through research, advocacy, training, networking and the dissemination of industry best practices. It was established in 2002 and today represents African private equity and venture capital firms, institutional investors, foundations, international development institutions and global professional service firms, amongst others. AVCA.
Cambridge Associates was founded in 1973 and gives investment consulting, independent research and benchmarks, performance-reporting and outsourced portfolio solutions, across all asset classes, to over 900 institutional investors and private clients worldwide. It has more than 200 professionals dedicated to consulting, research, and performance reporting on alternative assets and compiles performance results for more than 4,400 private partnerships and more than 60,000 portfolio company investments to publish its proprietary private investments benchmarks.
AVCA’s new CEO
The African Venture Capital Association (AVCA) announced the appointment of Michelle Kathryn Essomé as its CEO in September, in a press release. She has nearly 20 years of investment-banking experience and has held a range of marketing and origination roles in equities, fixed income, corporate finance and investment management with Merrill Lynch, Goldman Sachs, JPMorgan, Lehman Brothers and Nomura. Michelle holds an MBA in Finance from Columbia Business School, where she was a Robert F. Toigo fellow, and a BBA in Finance from Howard University. She has worked in the US, UK and France and is fluent in French. She commented: “This is an incredibly important time in the development of the African private equity industry and AVCA has a crucial role to play in supporting GPs and promoting the asset class. I am absolutely delighted to be able to harness the support of the African GP community, our DFI partners and peer associations to build a strong, member-centric association.”
“As CEO, my commitment is to ensure AVCA provides consistent, high value services to our members and acts as a catalyst for the development of private equity in Africa.”
AVCA, which is co-chaired by Tshepidi Moremong, also welcomes 2 new prominent members to its board. Runa Alam has joined the board as a co-Chair. She is a co-founding partner and CEO of Development Partners International LLP. Simon Walker has been appointed a Special Advisor to the board. Simon was CEO of the British Private Equity & Venture Capital Association (BVCA) from 2007 to 2011 and was recently appointed as the Director General of the Institute of Directors. For more details of their backgrounds, see the press release.
Working with BVCA
In August, AVCA entered into a memorandum of understanding (MoU) with BVCA to boost the implementation of its re-launched strategy across Africa, according to a report on www.privateequityafrica.com. AVCA is to get technical support from the BVCA including expertise in training African private equity fund managers and other professionals. AVCA will also be able to increase training to pension funds and other institutional investors and to encourage local institutional participation, an initiative supported by the Commonwealth Secretariat.
Private equity in Africa
According to AVCA: “Private equity in Africa has a very important role to play in building better, more sustainable companies, creating jobs and delivering genuine economic growth. The continent’s burgeoning middle-class combined with a growing consumer base and greater political stability is making Africa an attractive investment destination.
“Average economic growth in the region reached 5.8% between 2000 and 2008, more than the global average of 4%, driving interest from global private equity houses. In the first half of this year, US$1.1bn was raised by Sub-Saharan African funds.”
October 28th, 2011 by Tom Minney
Mark Mobius, the veteran emerging markets investor and head of Templeton Emerging Markets (www.franklintempleton.com), is bullish about the Nairobi Securities Exchange (www.nse.co.ke), although it is the worst-performing stock market in sub-Saharan Africa this year, according to an article on 27 October in the UK’s Financial Times.
According to the article, by Katrina Manson: “A long-term investor, Mr Mobius makes his money from yo-yoing frontier markets. Kenya’s has see-sawed between losses of 41.4% after post-election violence in 2008 to best sub-Saharan performer excluding South Africa last year, with a rise of 28.3%. Domestic investors tend to have both less money and less time to play with.” She also cites Aly-Khan Satchu, chief executive of Rich Management (www.rich.co.ke), a Kenyan financial services firm as saying the 2011 collapse is a “rout”. Domestic confidence is low, including among many of the 800,000 people who invested into Safaricom’s 532% subscribed IPO (KSh5 in the 2008 IPO, KSh3.05 at present).
Kenya has seen currency weakness, foreign capital flight, high inflation (it was 17% in September) and drought. The NSE has seen big cuts in volumes and much less participation by foreigners, who used to dominate trading, partly because of a global flight from risky assets. Share price indices have slid, losing the strong gains of 2010. Local investors see better gains from bonds, real estate and family firms.
The IPO of British American Investment Company Kenya only achieved 60% of its target (as reported on this website) and Kenya Airways seems to be holding back a share offer in which it wanted to raise $250 million for expansion. According to the article, Satchu said: “You can’t be issuing IPOs that flunk at the first hurdle. There has not been a successful IPO since Safaricom and that has impaired the stock market. They need a flagship discounted offer and will languish until they do it. Right now, the government couldn’t raise tuppence.”
The also article quotes Stella Kilonzo, head of the Capital Markets Authority (www.cma.or.ke), as blaming the stressed economy. She says there have been 3 years of reforms to boost disclosure and set more stringent requirements and these will eventually pay off. This year the NSE was renamed a “securities” rather than “stock” exchange in anticipation of a new bond index, futures and derivatives trading, exchange-traded funds and a new small and medium sized business index among others. If these come into operation, diversification could help the market.
There is still a cloud over the bourse from a scandal after stockbroking firms collapsed owing their clients money, some after allegedly trading their clients’ money illegally. No-one has yet gone to prison although court cases continue, and not everyone has been compensated, partly because the compensation fund does not have enough resources. Ms Kilonzo says regulation is now tighter.
Reportedly, a court case against the CMA by a collapsed brokerage firm that has been under statutory management since 2007 last month halted a plan to demutualize the NSE, including selling part of it and listing its shares on the Nairobi bourse. According to some analysts, demutualisation could help clean up the market by separating stockbrokers from the exchange’s owners.
Sentiment may be changing, after the Central Bank of Kenya (www.centralbank.go.ke) moved aggressively to push up interest rates by 4 percentage points this month, which may stabilize the currency and bring back investors. Good rains and strong investment in infrastructure could fund growth in 2012, although worries remain about elections.
Manson quotes Mobius: “People are fearful of coming in, so whoever goes there makes a bundle. We may go and buy more at a cheaper price.” The Frontier Markets Fund is invested in Kenya Airways and Safaricom.
October 26th, 2011 by Tom Minney
Government leaders, regulators and decision-makers across Africa recognize the success of private equity in growing companies, creating jobs and developing infrastructure. They are actively considering ways of encouraging flows of capital, both international and domestic, into private equity. This is one of the messages from the 3rd annual “Private Equity in Africa Leadership” Summit, co-hosted by the Emerging Markets Private Equity Association (www.empea.net) and the Financial Times publication, “This is Africa” (www.thisisafricaonline.com).
Babatunde Raji Fashola, Governor of Lagos State, was one of the key speakers and told the conference: “Returns are attractive, the possibilities are endless and we are ready”. Other speakers included Tendai Biti, Minister of Finance, Zimbabwe; pensions representatives from Ghana, Botswana, Kenya, and Nigeria; regulators from South Africa and Brazil, as well as leading African fund managers and global institutional investors. There were over 300 delegates from 30 countries.
Sarah Alexander, President and CEO of EMPEA said: “It’s clear from our Private Equity in Africa Leadership Summit that investors are clamoring for information and seeking a better understanding of the opportunities in the continent. It is also promising that African leaders and regulators are beginning to recognize the long-term economic impact of private equity and are encouraging investment.
“EMPEA will continue to play a key role in working with government and industry leaders, regulators and investors to facilitate a better understanding of the asset class and the opportunities in Africa.”
The 19 October conference in London had standing room-only attendance and very interactive question and answer sessions.
EMPEA announces the appointment of Okechukwu (“Okey”) Enelamah, founder and Chief Executive Officer of Lagos-based private equity firm African Capital Alliance (ACA), to its Board of Directors. This further deepens the representation of African private equity investors among the industry body’s global leadership. EMPEA Chairman Jeffrey Leonard commented: “Africa plays a big part in the emerging market private equity story, and we are fortunate that such an experienced and committed individual will help EMPEA further serve the needs of our growing and dynamic member community.” Okey Enelamah responded to the news, “I am honoured to be joining a Board of such dedicated industry leaders and I look forward to supporting EMPEA in its mission to further promote private equity investment in the Africa region in particular.”
The Private Equity in Africa Leadership Summit in London also saw EMPEA play host to its second Africa Council meeting. This draws together some of the top luminaries in private equity investment into Africa: Runa Alam – Development Partners International (DPI), Yvonne Bakkum – FMO, J. Kofi Bucknor – Kingdom Zephyr Africa Management, Ngalaah Chuphi – Ethos Private Equity, David Creighton – Cordiant Capital, Thierry Dalais – Metier/Lereko Metier, Hurley Doddy – Emerging Capital Partners (ECP), Hisham El-Khazindar – Citadel Capital, Roderick Evison – CDC Group plc, J-P Fourie – South African Venture Capital & Private Equity Association (SAVCA), Murray Grant – Actis, Richard Kramer – African Capital Alliance (ACA), Gloria Mamba – Development Bank of Southern Africa (DBSA), Henry Obi – Helios Investment Partners, Ziad Oueslati – Tuninvest-Africinvest Group, Soula Proxenos – International Housing Solutions, Martin Poulsen – African Development Bank, Davinder Sikand – Aureos Capital, Graham Thomas – Standard Bank, Paul E. Tierney – Development Capital LLC and David Wilton – International Finance Corporation.
EMPEA is an independent, global industry association that works to catalyze private equity and venture capital investment in the emerging markets of Africa, Asia, Central/Eastern Europe and Russia/CIS, Latin America, and the Middle East. EMPEA’s 300 members represent a broad array of private equity fund managers, institutional investors, service providers, and other key stakeholders in the industry, representing nearly 60 countries and over US$1 trillion in assets under management.
Echoing some of the themes discussed at that meeting, Sarah Alexander, President and CEO of EMPEA, can be viewed on CNBC Africa/ABN Digital commenting on why the “time is now for Africa,” here.
May 10th, 2011 by Tom Minney
The National Pension Commission of Nigeria (www.pencom.gov.ng) regulates over N2 trillion ($12.8 billion) in assets under management. This has been accumulated from 4.7 million people who have opened Retirement Savings Accounts and other pensions since the Pension Reform Act 2004. The assets are up from N1.8 trillion at July 2010 and the rate of contribution is increasing each year.
Africa’s domestic savings institutions are growing fast in many countries. In some capital markets they are growing faster than the demand for capital, the issuing of new shares, bonds and other investments, and they are mopping up available liquidity in the securities markets.
Mr. Muhammad K. Ahmad, Director General of PenCom, gave the figure at the opening of a two-day workshop jointly organized by PenCom and Organisation of Pension Supervisors (IOPS) on 5 May, according to a report in Daily Trust newspaper.
Pencom is the apex authority in the pension industry responsible for regulating and supervising. The website says it aims “to be a world-class organisation that ensures the prompt payment of retirement benefits and promotes a sustainable pension industry that positively impacts on the economic development of Nigeria”. Its regulatory and supervisory activities are risk-based and consultative.
Mr Ahmad explained that pensions are long-term investments which he said are available for “investment, infrastructure and other related investment outlet”, according to the newspaper.
He also talked about capacity building which is a challenge for any industry. It is a continuous process: “We need to change the way we supervise our regulative entities to focus on those areas that form the greatest risk” in order to focus Pencom’s resources. They also want “to clearly understand and identify early warning signals so that we can take appropriate actions.”
In another news report in April, Mr Ahmad said the number of contributors to the scheme is far less than expected given that there are an estimated 42 mn workers. He also said there is only a slow rate of growth in the number of contributors due to: lack of awareness and enlightenment for would-be contributors; poor compliance from the private and informal sectors; and the fact that the scheme is not implemented in some States.