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Hedge fund Scipion Capital launches third Africa strategy fund

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Scipion Capital, the wholly Africa dedicated hedge fund manager, has announced the launch of its third Fund – the Scipion Alpha Seeker Fund – which will launch in April and invest in liste

Scipion Capital, the wholly Africa dedicated hedge fund manager, has announced the launch of its third Fund – the Scipion Alpha Seeker Fund – which will launch in April and invest in listed equities and attractive IPO opportunities across the African continent.

The new fund compliments Scipion Capital’s two existing funds – the Commodity Trade Finance Fund which invests in commodity trade finance and asset based finance opportunities, and the Scipion Index Tracker Fund, the only fund to replicate the benchmark pan-African Ai40 Index of quoted large cap stocks.

The Cayman domiciled, US Dollar denominated, Scipion Alpha Seeker Fund will be an actively managed portfolio of shares covering the African continent, but excluding Egypt and South Africa as these stock markets are more closely correlated with Western Europe than other countries in Africa.

The fund will be available to institutional and qualified investors and will seek to deliver absolute returns against a benchmark of the MSCI Emerging Markets Index. Back testing has shown consistent over-performance over the MSCI EM Index for a volatility half of that index. The fund is likely to have particular appeal for pension funds and fund of hedge funds investors, as well as HNWIs, family offices and private banks. Currency risk will be hedged to the US Dollar.

Asset allocation in the fund will target those sectors of the economy expected to show greatest growth potential over the coming years in Africa namely building materials, telecoms, beverage companies, and finance sector stocks. Greater political stability, improving social conditions and welfare, and growing discretionary disposable income amongst consumers are driving the strong economic development in many countries throughout the continent.

IPO opportunities in Africa have already been identified for 2008 in which the fund will seek an allocation at the outset. The underlying market capitalisation of companies identified for the initial portfolio currently amounts to over USD80bn.

Emerging market strategies have strongly outperformed other hedge fund strategies for three of the last four years with the HFRI Emerging Market Composite Index returning 24.98 per cent in 2007 vs 5.49 per cent for the S&P500.

The African continent has become an increasing magnet for investment funds over this period as investors have sought to maintain alpha returns whilst diversifying risk away from traditional asset opportunities and markets, yet there are few existing management firms dedicated to the continent.

Commenting on the launch, Nicolas Clavel, chief investment officer of Scipion Capital, says: ‘This is a direct response to market demand we are seeing from our investors. Africa has so much potential to offer, across the continent, but local knowledge and understanding is key.

‘With increasing foreign direct and indirect investment in the continent, not least from other emerging market countries such as China, the potential of Africa is likely only to increase for managers knowledgeable and experienced about investing in the region.’

Scipion Capital is a segregated portfolio company which offers qualified investors the opportunity to participate in the high potential returns of investing across the continent of Africa without the constraints of sub-region or sector bias. The firm has offices in London and Geneva and its principals have been involved in managing investments throughout Africa for over twenty years.

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