The Louwdown on Africa
Foreign Direct Investment into SA Declined by 31.2% in 2014
This is according to the United Nations Conference on Trade and Development. Global FDI decreased by 16%, while investment in the African continent as a whole remained stable and investment in the Southern African sub region declined by 2% (Mail & Guardian). Eskom, Marikana, Nkandla…there is no shortage of headlines to deter investors. However, we are still seeing a lot of attractive investment and business opportunities. Our view is that the turbulent backdrop creates more attractive opportunities for those prepared to take a “bottom-up” fundamental research based investment approach. See the “Commentary” section for more thoughts.
Nigerian Stock Exchange Demutualisation
The NSE, which is currently owned by 560 independent and corporate users, plans to demutualise and may subsequently list. The move is aimed at overhauling the country’s financial markets infrastructure and attracting foreign investment. Companies listed on the NSE currently have a total market capitalisation of US$49bn, compared to US$900bn on the Johannesburg Stock Exchange (FT). This echoes the demutualisation and listing of the JSE in 2005. Exchanges are quasi monopolies. The JSE share has outperformed the All Share Index since listing and has been a particularly good trade for those who were able to invest in the period between demutualisation and listing.
TPG to Invest up to US$1bn in Africa
TPG is preparing to invest US$1bn into Africa through a tie-up with Sudanese Billionaire, Mo Ibrahim’s, US$500m private equity fund, Satya Capital. Private equity deals in Africa in 2014 were valued at US$8.1bn (FT).
Renergen Becomes the First Special Purpose Acquisition Company to List on the JSE
Renergen has raised R74m to invest in a portfolio of alternative energy assets. The company has 2 years to make the investments and plans to raise further top-up capital from shareholders. The company’s CEO is also a director of Molopo, which has a license to exploit a biogenic (natural) gas asset near Welkom in the Free State (Mineweb).
Dr Andrew R Louw CFA