MCB Capital Markets launches Africa Bond Fund to diversify portfolio
MCB Capital Markets expects to raise USD10 million through the MCB Africa Bond Fund (approximately Rs 331 million) in the coming weeks. (Image: MCB)
MCB Capital Markets yesterday launched the MCB Africa Bond Fund, which is the first investment fund to focus solely on African debt securities in local currency.
MCB Capital Markets expects to raise USD10 million through the MCB Africa Bond Fund (approximately Rs 331 million) in the coming weeks, and expects to double that amount in the coming months.
The objective of this fund is to generate positive returns by investing predominantly in local currency debt issued by African governments and corporations.
This new product targets local and foreign investors who believe in the future development of Africa and wish to benefit from its growth as it realizes its enormous potential in the long term.
The attitude of investors to emerging countries in general and Africa in particular is changing rapidly. Growth rates in some African countries are now among the highest in the world and the potential for development is enormous. The standard of living, economic performance and foreign investment is constantly on the rise.
Moreover, perception of the continent, which was the single biggest obstacle to investment in Africa, is changing rapidly. A study conducted in 2012 by the Economic Intelligence Unit on managers with funds totaling USD6.5 trillion observed that 66% believe Africa is the continent that offers more opportunities while 80% said they would invest between 3 and 5% of their portfolio in Africa by 2017, with a preference for fixed income funds.
With investors, including big names in international finance, demonstrating greater interest in Africa, they will see in the MCB Africa Bond Fund an opportunity to participate in the emergence of the continent and reap profits.
Also, investors are guaranteed access to a diversified Africa because the fund does not limit its exposure to only a handful of countries. MCB Capital Market has selected states which offer the best prospects based on the level of development of their bond market and their macroeconomic situation, among others.
For realizing this project, the MCB Africa Bond Fund targets a discerning clientele both in Mauritius and abroad, including individuals with high net-worth, pension funds, insurance companies and sovereign wealth funds.
Sophisticated investors can enter with a minimum commitment of USD 30,000 (approximately Rs 930, 000) under the condition that they consult a financial advisor first. Investment experts can start directly with a minimum commitment of USD 100,000 (approximately Rs 3.1 million) while for institutions such as a pension funds, insurance companies and sovereign funds, the minimum commitment is fixed at USD 1 million (approximately Rs 31 million).
MCB Africa Bond Fund will be managed by a team dedicated to major MCB Markets, with in-depth understanding of fixed-income products and risk management. The MCB Africa Bond Fund banks not only on the success of MCB in Africa but also on its network growth via the ‘Bank of Banks’ initiative of MCB which allows it to tap into local banks across Africa.
The MCB Africa Bond Index was created by MCB Capital Markets with the support of a specialized German company, where the index aims at giving a real prospect to investors by demonstrating the evolution of the fixed-income securities, while offering financial transparency to the investors.