Dubai: Stanlib, the $45 billion Johannesburg-based asset management operation of the Standard Bank of South Africa, has launched an Africa-focused Sharia equity fund.
The fund currently on a road show in the Gulf countries is targeting to raise $250 million. The open-ended fund registered in Ireland will invest in Sharia-compliant equities from across Africa except South Africa.
"There is a large pool of Sharia-compliant assets in Africa. As Africa is one of the last frontiers of assets with low correlation to the Western markets, it provides great opportunities for Gulf investors," said Ashraf Mohammad, portfolio manager of the fund.
The new fund targets a return of 15 to 20 per cent and will not charge a performance fee. While it offers twice monthly repurchase option, the net asset value denominated in dollars is published every day. The Fund House said yesterday that although the net asset value will be published in the dollar, the funds underlying investments would be in equities denominated in various African currencies.
Currency appreciation
"We are not using a currency hedge as most underlying assets are in African currencies that have been appreciating in the recent months. The investors stand to gain from the appreciation of these currencies," said Ashraf.
Stanlib already manages the $250 million (as of end March 2008) Standard Africa Equity Fund, which was launched in August 2007. The fund, which has attracted investors from the UK, Continental Europe and the Middle East, has returned 27.2 per cent since launch. It currently holds shares in 48 companies from nine African countries.
The economies of north Africa are witnessing a massive amount of investment from the Gulf states. The Gulf countries and China are fast becoming dominant investors in the region, taking over the role formerly played by Europe.
Africa has suffered less than other emerging markets from the market turmoil and economic slowdown in the US and other developed countries. "This lack of correlation really appeals to investors looking to diversify their portfolio," he said.
The new fund can invest in up to 16 African equity markets and has its major holdings in Egypt, Morocco, Nigeria and Kenya, which are currently the larger markets but there will be other holdings in lesser-known markets such as Zambia and Ghana.
The fund also invests in shares of companies not listed on African exchanges but which derive the majority of their turnover and profits from Africa. The mining and exploration companies listed on the London Stock Exchange (AIM) or the Toronto Stock Exchange are examples in this regard.
By Babu Das Augustine
© Gulf News 2008
