Insparo Asset Management has launched a new fund that will capitalise on the huge growth potential of African businesses and the rise of the continent’s consumer culture. The fund becomes Insparo’s second offering, following the success of the its Africa and Middle East Fund.
The Insparo Africa Equity Fund – launched at the start of February – will invest in market leading companies across North Africa and Sub-Saharan Africa employing minimal leverage. Unlike Insparo’s flagship fund, the strategy will also make investments in South African equities, although limited to 20% of the portfolio. The strategy focuses on consumer facing companies, a sector that offers high growth potential and attractive yields.
The rapid rise in consumerism and urbanisation in Africa, coupled with widespread political reform and the continent’s overall growth outlook, make it a highly attractive investment prospect. It is estimated that 50% of the 25 fastest growing economies in the next five years are African, and foreign direct investment into the continent has swelled enormously. China announced recently that its bilateral trade with Africa had increased by nearly 45% in a year to reach a record USD115bn.
The new fund launched with initial seed capital of USD7.5 million, raised through internal and external investors, and will be soft closed at USD250 million. Insparo aims to emulate the success of its flagship multi-strategy Africa and Middle East fund, which has returned 36% since launch in June 2008 – placing it among the best performing funds in its sector. The enormous growth potential of Africa means that the Africa Equity Fund is anticipated to make average unlevered annual returns of 15-20%.
The fund’s investment team, led by Fund Manager Jamie Allsopp, and comprising the same investment professionals as the flagship fund, has a wealth of experience in African investment. The fund will be targeting traditional hedge fund investors including fund of funds, high net worth individuals, family offices and endowments, in addition to institutional investors such as pension funds. It has a minimum investment of USD100,000 and offers monthly liquidity.
“The rise in consumption in Africa in the last decade has been remarkable, but there is still a huge amount of room for growth," says Allsopp. "The penetration of goods and services in Africa is still relatively low, and African consumers are projected to spend USD1.8 trillion in 2020, an astonishing increase of over a trillion dollars from 2008. The aim of this fund is to invest in sustainable companies that will benefit from and aid this positive tailwind.
“The recent events in North Africa make this an auspicious time to be launching a fund like this. 2011 is an exciting year for the African electorate with seventeen presidential elections scheduled and we are witnessing the birth of a new nation. Although we are taking a long term view with our investment strategy, the recent volatility will provide good entry points into the positive long term story of Africa.”
