The Arch Africa Private Markets Focus IC fund, established by Arch Financial Products to capitalise on the increasing strength of the sub-Saharan Africa market has returned 2.75 since its
The Arch Africa Private Markets Focus IC fund, established by Arch Financial Products to capitalise on the increasing strength of the sub-Saharan Africa market has returned 2.75 since its launch in the second quarter.
The Guernsey-domiciled fund, which has a minimum investment of GBP75,000 and has been launched with USD12m in seed capital, is targeting an annual return of 20 per cent, through investment in sectors such as infrastructure, natural resources, agribusiness and real estate.
Arch is working with local strategic partners to identify debt and equity investment opportunities, and plans to use local and international partners for ongoing operation of the assets in which the fund invests.
This is the third Africa-focused fund to be launched by Arch, following the Africa Invest IC fund and Africa Protect IC fund, which specialise in African agribusiness, and brings the firm’s commitment in the region to USD25m.
The new fund aims to build on Arch’s experience of private market investing through its existing fund range and its experience of direct investment in countries such as Malawi and Mozambique.
The fund also aims to reduces the time it typically takes investments in the region to produce returns. By combining private equity investments with private finance strategies, it seeks to deliver high short-term returns while achieving long-term capital appreciation.
Arch believes its ‘buy and build’ investment approach will benefit the whole region by investing in opportunities that offer high returns as well as enhancing the companies the fund invests in.
The emphasis will be on investing across the value chain, for example natural resource extraction combined with power plants and railway infrastructure, crop production together with food processing, and the exploitation of synergies with Arch’s burgeoning shipping business.
‘This is an excellent time to be investing in Africa and our experience in the region means we are well placed to take advantage,’ says Arch partner Silash Ruparell. ‘The whole continent is becoming more robust in terms of political and financial stability, with economies growing and inflation falling across the region.
‘There has been a surge in the development of infrastructure, and this in turn is providing impetus for supply-side productivity improvements. The decision of the G8 and the Paris Club to forgive much of Africa’s crippling long-term debt, in recognition of the continent’s significant strides toward good economic management and as an incentive for further reforms, has also been a factor.
‘It has helped to fuel economic growth well above the global average, and attracted investment from China, Europe and the US. As Asia was dubbed the Tiger Economies of the 1980s, we describe Africa as the new Lion Economies.
‘Rather than be exposed to the volatility associated with public markets, we feel that a private market investment approach such as ours, which combines private equity and private finance elements, is the ideal way to provide investors with strong, stable returns.’
London-based Arch Group is provides specialist asset management and structured investment products and services to retail and institutional investors. The group was established in 2002 and now has more than 50 investment partners and staff, managing investments totalling just under USD2bn.
