The Fundo Soberano de Angola (FSDEA) has announced the launch of five dedicated investment funds that will target high growth industries while promoting economic and social development in Angola and the Sub-Saharan region.
With an initial investment volume totalling USD $1.4 billion over the next three- to-five years, these vehicles will be dedicated to making investments in venture capitals in the sectors of mining, timber, agriculture, healthcare and structured capital through a separate mezzanine fund. In addition, the Fund also announced the establishment of a commercial entity that is focused on setting up micro-business incubators for national entrepreneurs.
José Filomeno dos Santos, Chairman of the Board of Directors of FSDEA, stated: “The new sectors targeted for investment by the Fundo Soberano de Angola represent sectors with high potential for investment, with several non-financial benefits, such as additional employment and vocational training.
“Following the capital preservation strategy deployed primarily by the Fund since January 2014, these new allocations will promote socio-economic development and generate revenues for future generations of Angolans.
“Given the current difficult fiscal context, these investments are extremely opportune because they can support the economic development required to reduce state reliance on crude oil revenues.”
With Africa’s vast mineral deposits offering important potential for mining companies, the FSDEA’s Mining Venture Capital Investment Fund will invest USD $250 million in this sector over the next three-to-five years. With a focus on Sub-Saharan Africa, and mainly in Angola, which itself has one of the richest sub-soils in the region, investments will be considered across the entire project development curve from exploration to upgrading and expansion.
The FSDEA’s Timber Venture Capital Investment Fund will invest USD $250 million in timber investments over the next three-to-five years. Timberland investments are core to promoting rural economic and social development by bringing much needed stability and jobs into underserved communities. Forestry projects are also a strong foundation for marginal communities’ transformation into prosperous communities in rural areas.
Agriculture and related agri-business represent a key sector in the continent, employing the largest percentage of the workforce and accounting for almost half of the regional GDP. Yet inefficiencies in this field have held back the production of the Sub-Saharan region. Returns from the continent’s farming can be greatly enhanced through investment and implementation of modern farming techniques.
The FSDEA’s Agriculture Venture Capital Investment Fund has allocated USD $250 million to the agricultural field, capitalising this sector already on high growth. This allocation will also contribute to the support of social objectives such as employment in rural areas and food security.
Investment in the healthcare sector is fundamental to the sustainable growth of the African continent. Accordingly, the FSDEA’s Health Care Venture Capital Investment Fund is set to deploy USD $400 million in health over the next two-to-three years. The Fund will focus on countries with the highest return potential and favorable government support for healthcare including Angola, Cameroon, Ghana, Kenya, Mozambique, Nigeria, and South Africa.
Finally, the FSDEA’s Mezzanine Investment Fund will support entrepreneurship where traditional debt funding is not suitable, by investing USD $250 million over the next three-to-five years. The mezzanine financing offering is positioned to meet the needs in sectors that are predominantly entrepreneur driven, a critical element that drives a country’s prosperity.
To support national entrepreneurs, a commercial entity was recently created that will target domestic micro-business ventures. This investment aims to provide guidance to management, from business strategy to business success.
This initiative targets national entrepreneurs in the informal sectors that usually do not have access to guidance and private investment. This undertaking represents the first social integration initiative in the country that is carried out as a sustainable commercial venture.
“The allocation of capital to these new investment funds is part of the FSDEA’s investment policy to strategically target domestic economic sectors that remain shielded from global market volatility and provide sustainable high-yield returns over the long-term,” concluded dos Santos. “By routinely disclosing our investment strategies and the chosen operational strategy, we continue to reaffirm the Fund’s commitment to being transparent and accountable to the State and to national citizens.
“We were particularly pleased that this commitment of the Government was recently acknowledged through the high rating achieved by the FSDEA with the Linaburg-Maduell Transparency Index rating.”
The announced new investment funds add to two existing ones, which were publicised in the third quarter of 2014; namely the USD $1.1 billion Infrastructure Fund that will target investments in PPPs, privatisations and large industrial developments, and the $500 million Hotel Fund for Africa set to fulfil the undersupply of international standard business hotels in the region.
The funds established by the FSDEA are dedicated to sector specific co-investment strategies in the sub-Saharan region, with a strong focus on the country, which is in the process of establishing a regulated financial services sector at a national level.
Altogether, these new entities consist of tax-efficient limited liability partnerships licensed and regulated by the Financial Services Commission (FSC) of the Republic of Mauritius.
The FSC licenses, regulates, monitors and supervises the conduct of business activities in the non-banking financial services sector, within an internationally recognized legal framework that includes a Financial Services Act, a Securities Act and an Insurance Act.