Many institutional investors continue to have a broad aversion to emerging markets and conventional value-investing. Moreover, those that seek to achieve superior and uncorrelated returns in Africa continue to be frustrated by the relative shortage of high-quality and sizeable Private Equity funds across the continent.
Whilst the African PE market remains embryonic, over the past decade African PE returns have actually outperformed African public markets by an average of just over 4% per annum albeit with a higher degree of volatility (source: Bloomberg). Sandown’s analysis of Africa PE returns suggests that the poorest-return public and private investments have been in companies and sub-sectors that have suffered from poor levels of corporate governance and/or suffered from a myriad of external and unpredictable factors. Sandown’s proprietary screening process explicitly excludes such opportunities, thereby minimising portfolio risk.
Sandown’s investment process focuses on corporates that are exposed to medium-long-term consumption-driven characteristics, complemented by management teams reinforced by Sandown’s input. Sandown’s investment pipeline comprises more than 30 listed mid-small-cap African companies which are trading at near distressed levels of valuation, exacerbated by the COVID-19 pandemic.