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Opalesque Exclusive: Scipion to launch new African hedge fund in April The Scipion Alpha Seeker Fund will be launched next month. The investment objective is to obtain absolute returns, and to outperform the benchmark (MSCI EM Index). The Scipion Alpha Seeker Fund is an actively managed portfolio of shares covering the African continent, but excluding South Africa and Egypt as those markets are more correlated to other traditional emerging markets than the rest of the continent.

Process / Philosophy The stock selection follows a top-down approach where we first select sectors that are likely to grow in the current economic cycle. Currently across most of the continent, these sectors are mobile telecom companies, breweries, cement companies and indirectly banks which benefit from the increased cash flow of the first three sectors mentioned. Within the relevant sectors, we favour large capitalised companies that offer appropriate daily liquidity. The portfolio will also invest in IPOs showing in sectors that show significant growth potential.

In sub-Sahara Africa, the formal sector in which those companies operate is a small proportion of the overall economy. Discretionary Income spending which is starting to appear in the region will be directed to the formal sector, and the volume of business handled by them is likely to grow exponentially with growth limited by capacity factors more than anything else.

The currency risk to the dollar is hedged ......................

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