Regulatory expertise vital as African managers eye Europe

Allan_WoodThere’s no doubt that Africa has been seen increasingly as an attractive prospect for inbound investment in recent years, with investors seeing real potential in the continent, particularly in the private equity, infrastructure and real estate asset classes, as it experiences strong economic growth. Figures from the African Development Bank, for instance, show that the average GDP for the continent reached 3.5% in 2018 and is projected to accelerate to 4.1% by 2020. This has attracted the attention of global investors, who have accumulated record amounts of investable capital in recent years, but who have been slow to deploy this capital because of tighter yields and strong competition in traditional markets. With a search for yields resulting in a growing appetite for foreign direct investment, Africa has now risen to the fore, and this has presented African-based managers looking to fund raise with a significant opportunity. Navigating the global – and particularly the European – institutional investor landscape, however, requires specific expertise. It is for this reason that a rising number of international managers, including those based in Africa, are turning to specialist international finance centres (IFCs), like Jersey, that have considerable experience in navigating global regulation and compliance requirements, to support their future ambitions. Capital raising
For its part, Jersey, which recorded a new record total level of fund assets under administration in June this year (£342 billion), has been building a strong relationship with African markets for more than two decades, working with private and institutional investors to support their outbound and inbound investment objectives. This relationship continues to evolve, with Jersey increasingly acting as a bridge between capital raising in Europe and investment in Africa – currently Jersey accounts for around £15.5 billion in deployed capital across African markets, including Egypt, Kenya, Uganda and South Africa. Particularly against a backdrop of considerable political and regulatory change, including Brexit and a forthcoming AIFMD II review for example, addressing the European regulatory and legislative requirements is vital for any manager whether it’s raising capital for direct investment or seeking liquidity through a permanent capital vehicle as an exit strategy for investors. It’s also crucial to consider the substance, governance and operational risk requirements of the investors themselves – concepts and processes that have become embedded in the approach of IFCs like Jersey that strive to be at the forefront of global regulation and oversight. Jersey introduced new economic substance legislation earlier this year, for instance. With around a thousand regulated funds and the largest number of FTSE 100 companies registered outside of the UK, Jersey provides the perfect platform to support African managers, enable them to access European investor capital, and ensure they meet their obligations. Future
With investor appetite for African opportunities expected to persist, IFCs that can offer a safe, familiar and transparent tax-neutral environment for pooling capital and that can clearly meet market access requirements, including under the AIFMD, will continue to prove attractive to African managers looking for ongoing expert support. Further, proven expertise across the alternative asset classes, including private equity, venture capital and infrastructure funds, a strong regulatory bill of health, and a clear commitment to service and digital innovation will also all become increasingly important, enabling African managers to meet the expectations of global investors. From Jersey’s perspective, the endorsements it has received for its regulatory and legal regimes from the likes of the EU, OECD and FATF, its firm focus on speed to market, with funds able to be set up in as little as 48 hours, and its commitment to digital innovation, mean that it is ready to provide a clear solution for private equity, infrastructure and real estate structuring into Africa. As investors continue to look to Africa to diversify and enhance their portfolios, managers that can draw on that sort of expertise and experience will undoubtedly benefit, whilst enabling the market to continue its upward growth trajectory into the future. Allan Wood is regional head – West at Jersey Finance ©2019 funds global mena

Sponsored Profiles

There’s no doubt that Africa has been seen increasingly as an attractive prospect for inbound investment in recent years, with investors seeing real potential in the continent, particularly in the private equity, infrastructure and real estate asset classes, as it experiences strong economic growth.

Plausible explanations exist for why low-volatility stocks perform better than their high-volatility counterparts.

Aberdeen Asset Management has set up its first Middle East office in the newly established Abu Dhabi Global Market. Andrew Paul, senior executive officer, explains why.

A recent sovereign bond issue from Saudi Arabia underlines the appeal of emerging market investing. What must investors consider when allocating to this asset class? Firas Mallah of BMO Global Asset Management shares his views.

Executive Interviews

INTERVIEW: ‘Financing is the blood of Iran’s economy’

Amid a fresh wave of American sanctions, Romil Patel spoke to Meysam Hamedi, director of financial markets and instruments at Iran’s Securities & Exchange Organization (SEO).

INTERVIEW: Totally mega

In 2016, global consulting firm PWC forecast the emergence of five global ‘megatrends’ in the next two decades. Stephen Anderson, its Middle East clients and markets leader, talks about their...

INTERVIEW: Protecting the investment

Rasmala’s trade finance fund recently passed $100 million in assets. Doug Bitcon, head of credit strategies, explains why he has to be hands-on.

EXECUTIVE INTERVIEW: A natural interest in the topic

Since 2016, Guillermo Ortiz has been a chairman of Latin America’s BTG Pactual. The former central banker of Mexico talks to Nick Fitzpatrick.

Roundtables

Middle East Investor Roundtable 2020: Dimensions of diversification

Investors in the Middle East consider the tools that will be needed to navigate the Covid-19 crisis, the continued appetite for dividend and why it’s all about tech. Chaired by Romil Patel.

South Africa asset management roundtable: Global rebound on ice

Experts discuss the investment implications of the coronavirus pandemic, a delayed rebound in global growth and dealing with South Africa’s energy issues head on. Chaired by Romil Patel in Cape Town.

South African roundtable: Taking the bull by the horns

Our panel discusses Chinese investment in Africa, financial institutions’ contribution to economic sustainability and regulatory concerns. Chaired by Romil Patel in Cape Town.

ROUNDTABLE: Hooked to the global caravan

With the MENA region at a tipping point, our panellists talk about economic diversification, the impact of regulation and the delayed Saudi Aramco listing. Chaired by Romil Patel in Dubai.