U.K.-based Insparo Asset Management has launched a new Africa-focused hedge fund that aims to capitalize on the huge growth potential of African businesses and the rise of the continent’s consumer culture.
The Insparo Africa Equity Fund will invest in market leading companies aimed at the consumer space across North Africa and Sub-Saharan Africa. The strategy will also make investments in South African equities, although listed companies will be limited to 20% of the portfolio.
Fifty percent of the 25 fastest growing economies in the next five years are African, and foreign direct investment into the continent has swelled enormously. China announced recently that its bilateral trade with Africa had increased by nearly 45% in a year to reach a record $115 billion.
“The rise in consumption in Africa in the last decade has been remarkable, but there is still a huge amount of room for growth,” said Jamie Allsopp, who leads Insparo’s investment team. “The penetration of goods and services in Africa is still relatively low, and African consumers are projected to spend $1.8 trillion in 2020, an astonishing increase of over a trillion dollars from 2008. The aim of this fund is to invest in sustainable companies that will benefit from and aid this positive tailwind.
The new fund launched with initial seed capital of $7.5 million, raised through internal and external investors, and will be soft closed at $250 million.
The new vehicle is Insparo’s second fund. The firm’s flagship multi-strategy Africa and Middle East fund has returned 36% since launch in June 2008, placing it among the best performing funds in its sector. The firm expects the new the Africa Equity Fund to make average unlevered annual returns of 15-20%.