JOHANNESBURG: Abu Dhabi financial services firm Invest AD and Japan’s SBI Holdings launched a $100 million Africa fund on Monday, the latest push into the poorest continent’s fast-growing frontier markets.
The new fund, jointly capitalized by the government-owned Middle Eastern group and the Japanese financial services conglomerate, would invest in Nigeria, Ghana, Egypt, Tunisia and Morocco, a statement said.
It would invest in a range of sectors including banking, mining, consumer products and manufacturing through a mixture of listed stocks and private equity deals, it added.
"Fundamentals in the region are strong," said Invest AD chief executive Nazem Fawwaz Al Kudsi. "There is improved stability and we see immense future wealth potential — not only as a supplier of raw materials, but also in the growth of consumerism and in manufacturing bases."
If all goes to plan, the venture, which is likely to make its first investments at the beginning of next year, would be followed by another fund open to third-party investors with a strong focus on moving Asian capital to Africa.
"There is interest in Asia for Africa and Middle East investment, but it’s not their back yard," said David Sanders, the chief investment officer in Invest AD’s asset management arm. "Typically, they’re investing mainly in China."
Sanders said the fund would be looking to invest in a mixture of "minority stakes in unlisted companies, or negotiated stakes in public companies" because of the lack of liquidity that can inhibit large investments in relatively small African markets.
Frontier Africa is attracting substantial international investor interest at the moment, with dedicated funds drawing net new cash in 51 out of the last 52 weeks, according to fund-trackers EPFR.
The Washington-based analysts said last week African regional equity funds had attracted $660 million of new cash so far this year — nearly four times that seen in the whole of 2007, the region’s previous best year.
