Whatâ€™s the best case for investing in Africa now?
Look at returns. Over the last 10 years, the returns for emerging markets have been about 7.3%. If you look at Africa, the returns have been 13.8%. African markets have performed just as well as other emerging markets. In the first quarter of 2010, Africaâ€™s return has been between 20% and 25%. When you look at developed markets in the first quarter, they were about 4.87% (S&P 500).
What are your criteria for the African companies you look to invest in?
We look for good corporate governance, dominant market share, good solid management, the ability to execute, companies that have a good shareholder base. When we invest in local companies, we like those that have multinational shareholders. We also like companies that have access to cheaper capital.
Aside from that, there are three important factors I look for. The first is consumer growth. Africa is urbanizing. Weâ€™re looking for companies that are exploiting this huge market opportunity in the urban areas. The second thing is infrastructure, companies that provide infrastructure services to the big urban centersâ€”not only roads, but also technology infrastructure such as telephone and Internet. Many African countries are spending a lot of money to fund this infrastructure. Finally, there are many companies that are part of Africaâ€™s commodity story.
Most people, when they think about Africa, think of its abundant natural resources. We look at companies thriving in that space. Big multinational companies are beginning to invest in Africa to increase their oil and gas resources.
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