Source: Hedge Funds Review | 15 Feb 2011
Topics: Africa, South Africa, Equity long/short, Insparo Asset Management, China, Tunisia, Egypt
Civil unrest in North Africa may provide interesting investment opportunities for Insparo Asset Management's recently launched Africa Equity long/short equity hedge fund.
The Africa-focused fund, managed by Jamie Allsop, launched with $7.5 million of assets under management (AUM).
Allsop is hoping to capitalise on the recent unrest in Tunisia and Egypt. "The recent events in North Africa make this an auspicious time to be launching a fund like this. 2011 is an exciting year for the African electorate with 17 presidential elections scheduled," said Allsop.
"Although we are taking a long-term view with our investment strategy, the recent volatility will provide good entry points into the positive long-term story of Africa," he added.
This is Insparo's second hedge fund. The first, the Africa and Middle East Fund, was launched in June 2008 and currently has $189 million AUM. It also follows a long/short equity strategy and has returned 36% since launch.
The Africa fund will invest in companies across North Africa and sub-Saharan Africa. Unlike Insparo's other fund the strategy will also make investments in South African equities although these will be limited to 20% of the portfolio.
Insparo is optimistic about investment opportunities in Africa, particularly following China's announcement in December 2010 that its bilateral trade with Africa increased by nearly 45% last year to reach just under $115 billion.
Half of the 25 fastest-growing economies in the next five years are expected to be African, according to data provided by the McKinsey Global Institute in June 2010.
Allsop hopes the fund will achieve 15%-20% returns by capitalising on opportunities in African businesses and the continent's growing consumer culture.
"African consumers are projected to spend $1.8 trillion in 2020, an astonishing increase of over $1 trillion from 2008. The aim of this fund is to invest in sustainable companies that will benefit from and aid this positive tailwind," he said.
Allsop joined Insparo from New Star Asset Management and has over eight years of experience in UK and African equity markets. He formerly managed the New Star Heart of Africa Fund, launched in 2007, which invested in sub-Saharan equities excluding South Africa.
The seed capital for the Afica fund came from internal and external investors. The fund will be soft closed at $250 million.
The fund will be marketed to a range of investors including funds of funds, high net worth individuals, family offices and pension funds. It has a minimum investment of $100,000 and offers monthly liquidity with a management fee of 2% and a performance fee of 20%.
The fund, domiciled in the Cayman Islands, is administered by Quintillion, Ireland. The auditor KPMG and the custodian HSBC.
Insparo Asset Management, founded in July 2007 by CEO Mohammed Hanif, is an asset management company concentrating on frontier markets with a current total AUM of $200 million.
Quick fund facts
Name of fund: Insparo Africa Equity Fund
Portfolio manger: Jamie Allsop
Management company: Insparo Asset Management
Launch date: February 1, 2011
Strategy: long/short equity
Minimum investment: $100,000
AUM at launch: $7.5 million
Share classes: US dollar
Administrator: Quintillion, Ireland
Auditor: KPMG
Custodian: HSBC
Domicile: Cayman Islands
Management fee: 2%
Performance fee: 20%
Redemption/liquidity terms: monthly
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