I’m glad Michael Spencer has finally cottoned on to something I’ve been saying for a long time now - says emerging markets expert Manraaj Singh.
If you could make ONE investment right now, in anything you want, anywhere in the world, what would it be? Gold, oil...a FTSE tracker fund? We’re tempted to say Africa...and Michael Spencer would probably agree with us.
Michael Spencer is one of the smartest men in the City. The Times Rich List says he’s worth £1.15 billion. Spencer controls the world’s largest inter-dealer broker, Icap, here in London. He’s also the boss at spread betting firm City Index. Most financial firms are getting battered by the ongoing credit crisis and market volatility, Icap is actually profiting handsomely from all the increased trading.
You see, what they do is provide broking services to trading professionals in the wholesale financial markets. They offer everything from the global equity and credit markets and indices to more exotic things like OTC (over-the-counter) financial products and services in energy, foreign exchange and interest rates.
That obviously puts Spencer in a very sweet position. He’s got practically the entire range of investment options across the world at his fingertips - literally.
So the fact that he’s putting tens of millions of his family’s money into Africa and the Middle East right now is getting a lot of attention. In fact, it made the headline news in the Financial Tines today.
Spencer’s family investment vehicle, IPGL has teamed-up with a US financial consultant to provide $125 million of seed capital to a new African hedge fund. And this isn’t some pipe dream either - they plan to launch it this month.
He’s not alone either...
They aren’t alone either. Right now, there is a flood of money heading towards the region. Just look at what Tutu Agyare is up to. Most people outside the City would never even have heard of him, but he was on the board of directors of Swiss banking giant UBS. And he headed the banks’ equities division in the Euro time-zone Emerging Markets. He was the top man in Russia and Eastern Europe, Turkey, Israel, the Middle East and Africa. Agyare was one of the big movers and shakers in the Square Mile.
But he’s moving on to bigger and better things. Right now he’s in the final stages of fundraising for two new African hedge funds that should pull-in $200m-$300 million. You don’t quit as one of the top men at the world’s biggest fund manager unless you’re on to a good thing...
And other hedge funds focussed in the region are expanding too. The biggest of the Africa funds is still Blakeney Management here in London with about $1.5 billion under management. They pioneered international investment into many of the African and Middle Eastern markets and helped finance the lucrative resurgence of one of our portfolio’s best picks (an undervalued company that hold’s the key’s to $135 billion in oil - it can’t get out of Africa without their say so... but more on that soon)...
But Blakeney is a low profile company. Very niche. Even in the City, most people would never have heard of them. Spencer’s very public move into Africa is on a whole different order. It could mark a key turning point in the scale of funds moving into Africa for one main reason - Icap has actually got the ability to bring African shares onto the global markets.
In for the long haul
Spencer’s new fund won’t just be pouring money into African market-listed shares though. It expects to have about 35-40 per cent of its holdings in illiquid investments. Those would be things like private equity, corporate and government bonds and bank loans, including issues in local currencies. That’s a massive vote of confidence in Africa. That’s why we are so excited about this. This isn’t a fund that’s just trying to make a quick return on fast-moving African markets. It’s investing in Africa’s long-term growth story - which is precisely the strategy of our little known company that’s about to reap the benefits of America’s need for oil...
We got in ahead of the pack with our investment in this company. In fact at present the share price is less than 30p... by the end of the year I firmly believe this will have doubled.
This huge windfall will be just the start for this company... it’s got major positions in the sorts of industries that Africa needs if it is going to keep on growing: transport, infrastructure, clean water....
Regular Profit Hunter readers will already know how bullish we are on the Africa story. The continent has 15% of the world’s population, but only 2 per cent of the world’s GDP. So there is still huge scope for growth. And, we are already seeing that happen. The IMF is predicting growth of 6.5 this year - almost three times as fast as Britain. And we don’t see any end in sight.
We believe that the trickle of foreign investment that we has been flowing into Africa so far could be about to turn into a flood. This is an excellent time to get into Africa.
You can learn the details of the African opportunity by checking out our portfolio... and if you’ve enjoyed reading Profit Hunter’s views on today’s emerging markets... you can get them every day, along with tips, hints, stock picks and much, much more...
Shares in the company the subject of this promotion are penny shares. On 02/05/08 the share price was 27.25p and the bid/offer prices of these shares was 27p/27.25p.
P.S. If you enjoyed this article then we encourage you to sign up for Profit Hunter. Track down exciting opportunities in the worlds’ emerging markets and always stay ahead of the curve.