This sovereign wealth fund is primed to become Africa’s biggest investor

VENTURES AFRICA – World’s biggest Sovereign Wealth Fund (SWF), Norway’s Government Pension Fund Global (GPFG), last year added five African states to the number of countries it approves as marketplaces for trading in equities. It is keen to take advantage of the pace of economic growth across Africa to garner profitable returns on equity investments.

The Norwegian fund’s investment in Africa has now been extended to Kenya, Tunisia, Ghana, Mauritius and Nigeria. Its investments in Nigeria, as at the end of 2014 was 497 million kroner ($63 million), which included stocks in companies listed on the Nigerian Stock Exchange (NSE).

The fund’s investment is highest in Zenith Bank, Nigeria’s largest bank, at 23.5 percent. This is followed by another lender, Guaranty Trust Bank at 21 percent. Access Bank has so far received the least investment from the wealth fund (3.2 percent).

The fund also invested 630 million kroner ($80 million) in Kenya’s equity market as of December 2014. These investments were spread across 11 companies. In total, it had investments in 169 African companies and 22 bonds from 4 issuers.

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Holdings (%) Value ($)
Access Bank 0.25 2,094,739
GTB 0.35 13,929,131
Intl. Breweries 0.87 3,607,887
Lafarge Africa 0.21 4,117,928
Nestle 0.10 4,579,247
Nigeria Breweries 0.17 11,527,775
Seplat 0.23 2,896,164
Stanbic IBTC 0.20 2,930,635
UACN Plc 1.38 4,989,210
Zenith 0.49 15,601,449
Total 0.17 66,274,165

Source: Nairametrics

Although the slump in global oil prices has hurt Nigeria, Africa’s largest economy, the International Monetary Fund (IMF) still projects impressive growth rates for Sub-Saharan Africa. Also, the number of middle-class households in the region has grown exponentially in the last decade. The Norwegian SWF is, therefore, determined to pour more cash into this emerging market.

“Which new markets we enter depends on which markets are available for investment, what market opportunities there are, and market standards,” the fund said in its latest report. “We will continue to add new markets to the portfolio as soon as they meet our requirements for market standards.”

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Although only 0.7 percent of the $814 billion fund’s investment was in the continent by December 2014, the fund is poised to increase its equity outlays in Africa. In a strategy report for 2014 – 2016 released last year, Norges Bank Investment Management (NBIM), manager of the wealth fund, said it would add external mandates as it enters into new markets and segments. It said it expects to have 100 external mandates by 2016, with the share of funds managed by external bodies expected to have risen by 5 percent. “We use external equity managers for the majority of our emerging markets investments and for all our investments in frontier markets,” the fund said.

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