AFRICA – Two UK local authorities are understood to be planning to invest in a new African fund run by regional asset manager Imara Asset Management.
And the firm says European schemes could generate returns of up to 15% by investing in Africa.
According Zimbabwe-based chief executive John Legat, there has been significant interest in the Imara African Opportunities Fund since inception – with two UK local authority pension funds already in the process of investing in the fund. He declined to name them.
Imara has also visited Switzerland where there has been “phenomenal” interest. “There has also been interest from hedge fund managers who are interested in investing on their own account,” said Legat.
The fund is looking to raise $20m before close. The full amount will then be invested before the fund is re-opened.
“If we don’t close it at the point, we will have too much and it will impact on performance. It is also not fair to investors,” he said.
The fund – domiciled in the British Virgin Islands and US dollar denominated - has a benchmark figure of absolute return over the medium term. “We expect long-term returns of about 15%,” said Legat. It has raised £3m so far - mainly from pension funds and rich people.
“We are looking to market to long term investors with a three to five-year view and beyond,” said Imara’s UK-based managing director Jonathan Chew.
As a result the fund requires a minimum investment of US$100,000.
“There are two close-ended funds, but to my knowledge this is the only open ended fund in this area. It’s open-ended because essentially you are investing in an area and a product that you will grow into,” Legat told IPE.
The asset managers have identified 10 “investible” African countries with developed financial systems. These include Nigeria, Ghana, Kenya, Botswana, South Africa, Zimbabwe, Tunisia and Egypt, Malawi, Mauritius and Zambia.
According to Legat, several of these countries have experienced significant and persistent growth over the past five years, and the firm has even seen returns on its capital investments in Zimbabwe.
Bad media coverage of the continent, “the Bob Geldof influence” and in Zimbabwe’s case the halving of the economy, have all resulted in the large-scale under-valuing of African assets.
“Imara is focussing on bottom up. We want to buy companies that are dominant in the market. The money generated can then be reinvested into the market, which will help economies grow further,” said Chew.