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New Pan Africa Debt Fund provides institutional investors with more choice

In a world of uncertainty, rising inflation, low interest rates, high liquidity and rising government debt – how do we generate income growth and capital protection from our multi-asset income fund?

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Johan Marnewick

Johan Marnewick

Head of Credit Alternatives

Lievin Mbuyamba

Lievin Mbuyamba

Portfolio Manager

Jonathan de La Pasture

Jonathan de La Pasture

Portfolio Manager

Key takeouts
  • Our Pan Africa Debt Fund aims to generate stable income and capital growth with a target return of three-month US dollar Libor plus 6% over a three-year rolling period.
  • Managed by our Credit Alternatives team, the Fund will invest in hard currency debt predominantly listed on global exchanges issued by African sovereigns and corporates.
  • The Fund will appeal to institutional investors seeking returns that are less correlated with the performance of other global and emerging market assets.
  • Investors will have access to attractive yields available in the wider African market through a vehicle that is managed to minimise downside risk.

Our new Pan Africa Debt Fund, launched on 8 September 2021, will allow investors to tap into the attractive dollar yields, geographic diversification and fast-growing economies presented by the African continent.

 

The open-ended Pan Africa Debt Fund aims to generate stable income and capital growth with a target return of three-month US dollar Libor plus 6% over a three-year rolling period. Managed by our Credit Alternatives team the Fund will invest in hard currency debt predominantly listed on global exchanges issued by African sovereigns and corporates. The Fund will always hold at least 60% of assets under management in sovereign Eurobonds and can include up to 30% in unlisted credit.

 

Johan Marnewick, Head of Credit Alternatives, said “We see tremendous value for our clients in the launch of a pan-Africa strategy. The Pan Africa Debt Fund will meet the longstanding demands of South African and international institutional investors for well-diversified and attractive exposure on the continent, packaged in a compelling vehicle. Our Fund will appeal to institutional investors seeking returns that are less correlated with the performance of other global and emerging market assets.”

 

Until now, institutional investors, both in South Africa and other territories, have had limited choice in accessing funds that offer broad exposure to Africa’s high-growth frontier and emerging market debt. The Pan Africa Debt Fund offers investors access to attractive yields available in the wider African market, through a vehicle that is managed within a comprehensive risk management framework designed to minimise downside risk.

 

African debt has a low correlation with global bond and equity markets, which makes it an important tool for diversification within asset portfolios. Additionally, the Fund’s investments will be largely dollar-denominated offering South African investors hard currency exposure.

 

Adding his voice to the launch of the Fund, CEO Derrick Msibi said “We are extending our capability from being a leading fixed income manager to include growing exposure to emerging markets. We are offering investors carefully curated exposure to African credit through the Pan Africa Debt Fund, which not only offers attractive investment opportunities but also builds and deepens financial markets. Over the next five years, Africa is forecast to be one of the fastest-growing regions globally which will require financial capital. The investments in the Fund will play a role in funding the continent’s post-pandemic recovery, while offering investors exposure to attractive opportunities.”

 

Africa is expected to have a robust post COVID-19 recovery with growth averaging above 4% from 2022 to 2026. Sub-Saharan Africa specifically will remain the second fastest growing region in the world after Emerging Asia. The continent’s long-term growth is underpinned by structural tailwinds that are expected to drive economic activity for decades including an increasingly developed, burgeoning and youthful population.  

 

Africa is also experiencing higher levels of investment in energy, transport and telecommunications infrastructure, a steady rise in urbanisation and increasing regional integration. These long-term trends should provide the backdrop for Africa’s attractiveness as an investment destination to continue to improve. By adhering to the ESG framework that guides all our investment activities, this Fund will result in an enhanced ecosystem that will contribute to improving standards of governance, and will help to broaden economic development opportunities. Investors in the African Eurobond market have experienced returns in excess of 8% annualised over the last 15 years.

 

Our Credit Alternatives team has a successful 8-year track record of investing in African US Dollar debt assets. In sourcing and risk managing Fund assets, we will continue to leverage our longstanding relationships with banks and other financial institutions active on the continent.

The Shares have not been and will not be registered under the Securities Act of 1933 of the United States of America (as amended) (the “1933 Act”) or the securities laws of any of the States of the United States. Except with respect to permitted U.S. Persons the Shares may not be offered, sold or delivered directly or indirectly in the United States of America, its territories or possessions or in any State or the District of Columbia (the “United States”) or to or for the account or benefit of any U.S. Persons. In reliance on the private placement exemption from the registration requirements of the 1933 Act provided by Section 4(2) of the 1933 Act and Regulation D thereunder, the ICAV may arrange or permit the private sale of Shares to a limited number of “accredited investors” (as defined in Rule 501(a) of Regulation D under the 1933 Act) in the United States under restrictions and other circumstances designed to preclude a distribution that would otherwise require registration of the Shares under the 1933 Act.

 

This post about the PAN Africa Debt Fund is intended only for non-US investors Qualifying Investors.

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