April 18, 2011

African Opportunity: More Than Just The Headline Names

Last week, Nile Capital’s Larry Seruma was quoted in an article in the New York Times entitled “At Opposite Ends of Africa, Fear and Confidence in Markets,” which compared and contrasted opportunities for investment in Egypt and South Africa.

We found this dichotomy very interesting and insightful. However, as specialized Africa investors, we would like to caution against looking at African investment opportunities as existing in these two nations alone. There is no doubt that South Africa and Egypt are the economic powerhouses of the continent, and on a market cap basis account for a substantial majority of the public equity listings. Yet Africa is a continent with 53 countries, a number of which have active exchanges. An investor who limits his or her exposure to South Africa and Egypt would be similar to an investor who only considers New York and California when looking for opportunities in the United States. We at Nile take seriously our claim of being a ‘pan-African’ investment firm. Our Africa knowledge base spans the geography from Cairo to Capetown: that includes everything in between. You can see from our most recent Fund Fact sheet that while South Africa and Egypt are two of our higher exposures, they are by no means the only places we see opportunity. In fact, many of the less well known opportunities may have greater long term potential for growth. Thus, although we understand the emphasis on Africa’s largest markets, we want to be sure that investors don’t believe that they are the only places where opportunities can be found.

We have previously written about the turmoil in Egypt (read here), noting that investors should consider more than the headline risk when considering exposure to Egypt. We remain confident in our thesis that there is opportunity for a selective manager to do well in the Egyptian market. As we have said before, political turmoil in the Middle East could be seen as a buying opportunity for a long term investor both because of indiscriminate, fear-based selling, and the possibility that improved governance will be a positive in the long term.

For more information about investing in Africa, please contact Nile Capital Management at (646)367-2820 or info@nilecapital.com.


We know Africa - from Cairo to Capetown.

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