Insparo Asset Management has announced plans to launch its inaugural Africa and Middle East hedge fund this month with an expected USD125m in assets, offering investors the opportunity to
Insparo Asset Management has announced plans to launch its inaugural Africa and Middle East hedge fund this month with an expected USD125m in assets, offering investors the opportunity to invest in regions of the world where GDP has almost tripled in US dollar terms since 2002.
Insparo’s principals and the managers of the fund, Mohammed Hanif and Francis Beddington, say its multistrategy approach allows investors to benefit from all forms of opportunities, whether sovereign or corporate.
The Insparo Africa and Middle East Fund, which is denominated in various currencies, aims to deliver returns exceeding 15 per cent per annum, while broadly avoiding leverage. It has a management fee of 2 per cent and a performance fee of 20 per cent.
Domiciled in the Cayman Islands and with a minimum investment of USD1m, it seeks eventually to raise more than USD300m from traditional hedge fund investors such as funds of hedge funds, private banks, family offices, high net worth individuals and pension funds.
The fund, which Insparo says has low correlation to other markets, has been set up to exploit a very positive growth dynamic in both Africa and the Middle East, where real GDP growth is forecast to remain comfortably above 6 per cent, second only to Asia, up to 2010, driven by debt relief, improved economic policies, a commodity ‘supercycle’ and huge trade and investment growth with China and India.
The fund will invest in sectors including infrastructure, agriculture, metals and mining and areas that benefit from the emergence of a middle class. The fund will invest in listed and unlisted equities as well as loans and bonds denominated in both hard and local currency.
Hanif, Insparo’s chief investment officer, was previously responsible for emerging market distressed debt and special situations at BlueBay Asset Management and has more than 10 years’ experience in emerging markets proprietary trading and portfolio management. He was previously was a director in the illiquid emerging market proprietary trading business at Dresdner Kleinwort Wasserstein.
Beddington, the firm’s head of research, held the same position for Central and Eastern Europe, the Middle East and Africa at Standard Bank. He has 15 years’ experience in African markets including previous senior roles at Chase Manhattan, JPMorgan Chase and the UK government’s Overseas Development Administration.
Insparo, which was established last July, has been running a single managed account of USD15m over the past nine months and has produced an unleveraged annualised return of 39 per cent net of fees, including a net return of 17 per cent in the difficult first quarter.
‘This is the first targeted fund of its kind with a proven track record and a ready pipeline of opportunities,’ Hanif says. ‘It gives investors a direct route into sub-Saharan Africa, Middle East and North Africa investment opportunities.
‘Insparo is unique in that it marries the information advantage generated from the firm’s unique relationships on the ground with execution expertise and an unashamedly institutional style. This is critical when you consider that there are 25 functioning stock exchanges in Africa and 18 local bond markets already available to foreign investors.’
Insparo has seed funding of USD125m locked up four years from investors including IPGL, a private holding company owned by Icap chief executive Michael Spencer and his family, and specialist emerging markets brokerage Exotix.
‘The Middle East and Africa offers strong potential returns with low correlation to developed and other emerging markets,’ Beddington says. ‘It is growing faster than any region except Asia yet most global emerging markets funds are still significantly underweight [there]. Opportunities in Africa are huge. Not investing in Africa is like ignoring emerging markets in the 1990s, South-East Asia in the 1970s or Japan in the 1950s. It is the last frontier.’
