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Alternative Market Briefing

Africa offers investors plenty of idiosyncratic opportunities and market inefficiencies

Monday, January 20, 2014

Komfie Manalo, Opalesque Asia:

Africa offers investors plenty of idiosyncratic opportunities and market inefficiencies. There are approximately 100 Africa-focused funds, many of them managed from outside Africa. The investment interest in the region is driven by European single and multi-family offices, some of the very large asset consultants have all been over the continent looking at some of the local managers.

These were some of the findings of hedge fund and asset managers who attended the recent Opalesque South Africa Roundtable in Cape Town.

Andre Steyn, portfolio manager at Africa-focused alternative investment firm Steyn Capital Management said, "In Africa, we have about 1,200 listed stocks currently, so the universe we are looking at is roughly three times the size of South Africa. But, the market capitalization is a lot smaller. It still lends itself to a number of opportunities. In terms of market inefficiencies, it’s a nice place to be. One of our current trades is in a rights offering, where we are buying the rights including the premium, at 1.50 and selling the shares at over 2. There are several idiosyncratic opportunities like this where we are able to participate, given our modest fund size."

Steyn made the comments after James Gilfillan, chief investment strategist at investment advisory firm ......................

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