The African landscape is experiencing a meaningful transformational shift as a result of the mushrooming of small and medium businesses across the continent, with more than 2,000 African start-ups – out of 3,000 – having secured investment from venture capitalists.
The South African investment community and pension funds, in particular, are sitting on the cusp of an infrastructure boom that provides an excellent opportunity for diversifying portfolios and supports the development of critical infrastructure for the country.
Angola raised $1.75bn in overseas markets this month following three other Eurobond issues in 2015, 2018 and 2019. The government said that $750m of the proceeds from this debt sale will be used to buyback existing Eurobonds due in 2025 and 2028 and the remainder to finance its budget.
The South African hedge fund industry ended 2021 with assets under management of R86.93bn, according to Association for Savings and Investment South Africa (ASISA).
The Africa powerhouse
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The listed property/Real Estate Investment Trust (REITs) market has been tumultuous these past few years, with the onset of Covid-19 adding to the sector's challenges. For an extended time before that, listed property shares were the best performing asset class on the Johannesburg Stock Exchange (JSE), paying consistently high dividends and enjoying strong capital appreciation.
In the last ten years there has been a wide variance in investment returns across regions. The US and to a lesser extent other developed markets have delivered strong returns while emerging markets have lagged. Many African markets have fared even significantly worse than other emerging and frontier markets. While US equities rose more than 350% in ten years, the investment return for Ghanaian equities was even negative in USD terms.
There is a strong business case for venture capital (VC) investing in South Africa, not least because of the opportunity it presents for positive social and economic impact. This was discussed extensively by a number of key industry players at the Southern African Venture Capital and Private Equity Association (SAVCA) VC Conference 2021 held in Cape Town last week.
It is not a revelation that many African economies remain heavily reliant on commodities exports. But just how closely African frontier equities markets’ performance (in USD terms) generally correlates with the global level of commodities prices is somewhat surprising. That’s because the equity market indices of sub-Saharan African frontier markets are completely dominated by domestically focussed sectors, such as financials and telecoms.
Kingsley Williams, Chief Investment Officer of Satrix, looks into whether South Africa has been left behind in the global adoption of indexation
Several East African states have become the focus of attention for international investors. Economic growth in the region was around 6% in 2019 and is expected to be around 1-2% in the Corona year 2020. Real estate offers foreign investors good market access and enables them to increase yields and diversify risks
SAVCA’s 2020 private equity survey, which reports on data for the 2019 period, reveals that while there has been an increase in women and black investment professionals within the Private Equity (PE) space over the past few years, there is room for further growth and improvement. As at December 31, 2019, 28% of all investment professionals were female and 43% were black. When looking at fund manager ownership, the numbers start to shrink; only 9% of fund managers are female-owned whilst a growing number – currently 38% – are black-owned.
