International fund managers chase wealthy Nigerians as economic boom feeds assets growth Paul Henderson moved to Azerbaijan (Central Asia) in 2006 just fresh out of law school in the UK to seek out investment opportunities in a region largely uncorrelated to world markets. Seven years later Henderson, an associate at Surgeon Capital is on his first trip to Lagos-hosted by Financial Derivatives Company (FDC) – and looking to convince high-net worth Nigerians of the need to diversify their asset class and invest some of it overseas in one of Sturgeon’s three Frontier alternative funds. “Having spent time in London and New York, I have seen that most investors there have a hard time appreciating the risk and opportunities, a frontier fund like ours can provide,” Henderson said in an interview with BusinessDay, in one of Lagos’ new luxury hotels. “We feel that high net worth individuals in Nigeria will however have an easier time accepting and investing in our fund, because the countries we are investing in are quite similar to Nigeria.” The interest of fund managers like Sturgeon in Nigeria is in a sense a paradigm shift and vote of confidence in the decades old liberalisation of the economy that has led to a five-fold expansion in GDP since 1999 helping to unlock new wealth. Africa may have as much as 200 “hidden” billionaires operating in the unofficial economy, investor Mark Mobius said last year. The continents richest man is already a Nigerian Aliko Dangote, with a total net worth of $20.8 billion, according to data from the Bloomberg Billionaires Index (BBI). Nigeria’s gross domestic product (GDP) is forecast to expand an average of 6 percent a year for the next five years, according to International Monetary Fund (IMF) data. This is seen as helping to guarantee a market for fund managers like Sturgeon as they seek to serve newly wealthy Nigerians wishing to actively manage their money. The move by fund managers like Sturgeon to seek out wealthy Nigerians is a sign of the growing importance of Nigeria and Africa to global capital markets, according to Sebastian Spio-Garbrah, MD of Frontier markets specialists DaMina advisors. “Ten years ago I could not imagine a fund manager from Europe, flying to Nigeria to look for wealthy individuals to market a fund to. Today it is becoming much more common,” Spio-Garbrah, said. Around one-third, to one-half of Sturgeon capitals Firm-wide portfolio across the three funds they currently manage is invested in Kazakhstan at any given time. Kazakhstan currently trades at about a 50 percent discount to the MSCI Frontier Index based on Price/Earnings multiples, meaning a simple mean reversion could see a substantial upside to valuations. The funds also have exposure to Turkmenistan, Azerbaijan and Mongolia, all with huge oil and gas/ natural resource wealth like Nigeria. To be a Sturgeon client, you must have a minimum of $200,000 (N31.8 million) as an institutional investor or $5,000 (N795, 000) for retail clients. Sturgeon funds which are domiciled in Luxemburg are regulated by the UK FCA. It has assets under advisement in its three funds of $85 million, and invests in under-researched Central Asian internationally (London) listed equities, such as Dragon oil, (market cap., $4.8billion) and Halyk Bank, (market cap., $2.25 billion). Annual management/ performance fees range from 1.5 – 20 percent. Competition for the new rich in Nigeria is set to continue as international banks like Citibank in partnership with PE firm Blackstone have in the recent past sought to expand their private banking business in Nigeria.
Posted on: Thu, 24 Oct 2013 11:51:08 +0000
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