FMG Makes Africa Hedge Fund of Funds Offering

May 30 2007 | 2:02pm ET

FMG Fund Managers is making a break for what it dubs the “final frontier”—Africa—with its latest offering. The firm last month launched the FMG Africa Fund, a long-biased Bermuda-based fund of funds with $3 million in internal capital; FMG will begin marketing the fund to outside investors next month. 
The fund will invest in all of continental Africa, aiming to put roughly a third each in South Africa, sub-Saharan Africa and North Africa, according to fund documents. The firm cites the region’s potential for long-term sustainable due to an “abundance of resources” and “plenty of cheap labor,” as well as the lack of foreign securities ownership as drivers for the new offering.

FMG is also bullish on Africa’s GDP growth, which it says “is expected to sustain 5-7% p.a. for the foreseeable future,” as well as its nascent financial market, which “has just under 500 companies with a market cap greater than $100 million including foreign listed companies.”
The Africa Fund is currently invested in three managers: two long-only managers and one long/short trader, according to Arild Johansen, a principal in FMG’s Norway’s office. The unidentified long/short trader is an established manager based in South Africa managing some $100 million in assets and has a three-and-one-half year track record.

“The idea will be to find a mix where possible but it will be a long-biased fund so the number will be from five to eight managers,” said Johansen. “Only two markets offer hedging capabilities and we seek investments throughout the African continent. We are doing research on some very specific mandates as well so the portfolio will be as broad as we can make it.”

The Africa fund’s A shares charges 2% for management and 20% for performance, with a $10,000 minimum investment requirement while its B shares charge 1.5% and 10% with a higher minimum investment requirement of $100,000.

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