Investing In Africa

The case for investing in Africa has come under the spotlight this year, with many seeing it as the continent offering the richest opportunity in what is expected to be generally a lower-return global environment.

The prospects do look compelling when you consider:

• Sub-Saharan Africa is home to seven of the world’s top-10 fastest growing countries, according to IMF forecasts for 2011 to 2015.
• It has a population of 900 million with a spending power of $1 trillion – and the fastest growing middle class in the world.
• In contrast to most developed economies, it has positive demographic dynamics.
• Corporate governance is improving and there is a steady inflow of international businesses 
into Africa.
• Seventeen African countries rank ahead of India in the World Bank’s Doing Business Index, 
16 ahead of Brazil, 11 ahead of Russia and eight ahead of China.

In recognition of the much-improved economic and political prospects on the continent, Sanlam has developed a core range of products that gives investors access to credit, property and stock markets in a range of well-run African countries it has pinpointed north of SA.

This suite of African funds offers access to the many opportunities the continent has to offer in the years ahead – without exposing investors to undue risk given Sanlam’s experience and track record in Africa and its proven investment credentials.

These funds are:

The Sanlam African Frontier Markets Fund invests in African frontier stock markets, including Nigeria, Egypt, Kenya, Morocco, Mauritius, Botswana, Ghana and Tunisia.

Key features of the fund are:

• It is an equity fund that offers exposure to a value-style of investing.
• The long-term objective is to deliver capital growth by investing in African stocks the investment manager has identified as being undervalued and offering above-average growth potential.
• Stocks are selected after deep and rigorous bottom-up fundamental analysis, which determines the intrinsic values of the shares.
• It is a dollar-denominated unit trust fund and the minimum investment is $1 000.
• The rand feeder fund will be available soon on Glacier’s platform.

The Sanlam Africa Credit Fund which is one of the first of its kind, gives investors exposure to the credit issued by both listed and unlisted corporates, financial institutions and governments in Sub-Saharan Africa.

Key features of the fund are:

• It invests in senior debt in 11 Sub-Saharan African countries that have stable political and economic outlooks.
• It invests in yield-enhancing credit assets with minimal currency risk.
• It invests in senior debt but offers returns in line with riskier, high-yielding debt in developed markets.
• It has a low correlation to developed markets so offers diversification opportunities.
• The fund currently has a running yield of about Libor + 5.9% but targets a gross annualised return of USD 3-million Libor + 8%.
• Investors can buy shares in this dollar-denominated Mauritian-listed fund. The minimum investment is $2.5 million.
• Funds can be redeemed one year after giving notice.
• Valuations are undertaken quarterly and investors receive semi-annual dividends.

The Sanlam Africa Core Real Estate Fund is one of the few funds that invests in completed investment grade African properties with little or no development risk.

Key features of the fund are:

• It invests in core commercial real estate assets, focusing on dominant A-grade retail, office and industrial properties in Sub-Saharan Africa.
• It offers a sustainable and growing income stream and has inflation hedge qualities, given the growth in rentals.
• It targets an annualised return of between 14% and 18%, which includes a cash distribution and capital value improvement.
• Investors can buy shares in this Mauritian-listed dollar-denominated fund. The minimum investment amount is $5 million.