Angola's $5 billion sovereign wealth fund is stepping up private equity investments at home and in sub-Saharan Africa as low commodity prices and currencies give it a cheap way in to hotel, farming and infrastructure projects, its chairman said. Jose Filomeno dos Santos, the 38-year-old London-educated son of President Jose Eduardo dos Santos, said the fund had earmarked 60 percent of its capital to regional private equity, a shift in focus towards its own back yard.
Previously the fund, set up in 2012 to help wean Angola's economy off oil, wanted to invest a third of its cash in the region, with another third in "opportunistic" international investments and the rest in safe havens such as US debt. Oil accounts for a third of Angola's GDP and 95 percent of its export revenues, making it particularly vulnerable to the commodity cycle. After being criticised for the slow pace of investment in its early stages, the fund is now in a strong position given the depressed currencies in oil producers such as Angola and Nigeria and commodity exporters such as Zambia and South Africa.
Low commodity prices have pushed down the price of local assets, either because economic growth has slowed, or because their value, in local currencies, has fallen. "The situation we have now, it's obviously ideal because the prices are fairer than when commodity prices are high," dos Santos told Reuters in an interview at the fund's central Luanda offices.
Of its seven private equity units, by far the biggest is a $1.1 billion infrastructure fund, 20 percent of which is now invested in projects in Kenya and Angola. The fund is particularly keen on public-private partnership deals that improve regional trade links, dos Santos said. A quarter of its $500 million hotel fund is invested in two hotel projects in Angola and the Intercontinental chain in Zambia, dos Santos said, while its timber fund is involved in a major eucalyptus concession in Angola.
Dos Santos said its agriculture and healthcare units - each worth around $250 million - were looking to make "sizeable" debut allocations this year. The fund's initial endowment of $5 billion from excess state oil revenues was fully paid up in 2014, but since then low oil prices and pressure on the state budget have meant it has received no additional state cash. The fund is meant to receive additional endowments of up to the equivalent of 100,000 barrels of oil per day if the oil price rises above the level forecast in the budget, giving the government a surplus.
Angola, which only emerged from a 27-year civil war in 2002, pumps over 1.7 million barrels a day, making it Africa's biggest oil producer while output in Nigeria - which normally holds that crown - is hammered by militant violence in the Niger Delta.
Comments
Comments are closed.