Renaissance Asset Managers has recently seen a surge of investor inflows into its Sub-Saharan Africa fund, which is now the largest Sub-Saharan UCITS fund on the market. Plamen Monovski, chief investment officer at the firm, talks about why the region is so attractive.
Investment Europe: Plamen, what’s caused this rapid increase in assets?
Plamen Monovski: This year, investors have finally started to realise the merits of investing in frontier Africa. The reason is that GDP growth has been nothing short of spectacular. And, in a sense, it’s been isolated from a lot of the trouble spots of the world, certainly from the European crisis. And the GDP growth has not only surprised with its robustness, by it has also boosted companies’ profitability and cash flows. So we’re seeing some of the highest earnings growth anywhere on the planet at this stage. And, at the same time, those companies that generate cash flow have started paying dividends, so we’re seeing some of the most generous dividend payers, again in Sub-Saharan Africa. Not the place you would expect. We’re also seeing a surge in local liquidity as the oil price has gone up, and that has created substantial inflows into local accounts, which have been under-invested. And, finally, the markets fell quite sharply in 1999 and they have just started their recovery. So in terms of actual performance, there is a very long way to go and I think investors are starting to see that.
IE: Who are the investors that are showing particular interest in this fund?
PM: We’ve got a very broad set of investors across the continent, especially from Germany, but, increasingly, from the UK and also from Scandinavia. Our investor base has always been global and we think this will continue. Over time, we expect to also be attracting some of the large institutional and private local investors who are getting increasingly confident to put money in their own markets.