Pensions Use World Cup to Urge Investment in Africa

(June 14, 2010) — Many asset managers view Africa as one of the least researched of the emerging market regions with immense opportunities of value for investors, and thus pension fund managers have used the South African-based World Cup to urge investment in the continent, the Financial Times reported.

“From my own experience in trying to market Africa to pension funds and consultants in the UK there isn’t always a huge amount of interest,” Dylan Evans, director of global investment markets at South African-based investment firm StanLib, said to the FT. He added that he sees this resistance to investing in the continent as a lost opportunity, as StanLib research reveals that a basket of Africa ex-South Africa’s largest 30 stocks has well outperformed all developed markets and the MSCI Emerging Market Index since the beginning of the last global bull market in 2003.

According to the FT, the $1.8 billion Royal County of Berkshire pension fund is believed to be the only UK pension fund to have invested strategically to the continent. The pension invested via a small investment with the Morgan Stanley Frontier Fund, which has invested in companies based in Ghana, Namibia, Nigeria, Botswana and Tunisia.

The $10.2 billion West Midlands pension fund is additionally planning to use diversified frontier funds to invest in Africa, spurred by the opportunity of higher returns, despite increased volatility.

In recent news, the Massachusetts Pension Reserves Investment Management Board (MassPRIM) agreed to invest a total of $65 million in an Ethos Private Equity fund targeting buyout and growth-equity investments in South Africa.