Investment

Rich individuals require specialised advisory and planning services in order to manage their wealth efficiently. This has led to the creation of wealth management service providers, either within large banks or as stand-alone organisations. Until recently, wealth management was concentrated in the West. This is changing rapidly with the pendulum swinging to the East and Africa, for the first time, is becoming a serious market. Cinderella is getting ready to go to the ball. Sherelle Jacobs reports.

During the 4th Common Market for East and Southern African States (COMESA) investment summit which was held in Dubai in March, there was increasing talk of sovereign funds finding their way to Africa.

Africa is now emerging as the investment destination of choice given the very good rates of return (around 29% compared to 10% or less elsewhere), its much-sought-after resources, its market size of around 1bn people and the ever-increasing segment of its consumer class.

However, while the overall level of foreign investment has increased substantially over the decade, investments in badly needed infrastructure have not kept pace. This area, according to many bankers, is now ripe as a secure home for sovereign wealth funds.

But what are sovereign wealth funds, how do they function and how can one access them?

Renaissance Capital’s 2nd Annual Emerging Markets Investor Conference in Hong Kong, held at the tail end of last year, came at a particularly important juncture for Africa in terms of foreign investments, especially in the mining sector. African Banker editor Anver Versi attended the meeting.

Africa, the world’s newest and fastest-developing emerging market is becoming a magnet for investment banking for both multinationals as well as local players. The last couple of years have seen a flurry of activity that has opened up the continent’s capital markets and is providing the finance needed to accelerate the continent’s transformation into a middle-income region.

Private equity is becoming an increasingly important factor in Africa’s economic development. It is also rapidly becoming the favoured channel for international investors to dip into one of the most exciting regions, in terms of growth, of the world. Private equity is also of particular value to Africa as it provides local companies with the means, and often the know-how, to expand and thus create more jobs and more wealth for their countries. This month’s Cover Story makes a detailed examination of the PE phenomenon as it obtains in Africa, provides a key to understanding what PE is all about and profiles some of the more prominent funds now operating on the continent.

Global financial investors continue to be enticed by the economic indicators that point to Africa’s rapid growth potential. The latest to announce ambitious expansion plans is the US giant, Citigroup.