GLOBAL - Danish labour market pension fund PensionDanmark is investing DKK200m (€27m) in the sub-Saharan region of Africa via an established fund and expects to increase its exposure to the continent still further next year.

The fund said it was putting the sum, which amounts to around 0.25% of total assets, into Duet Africa Funds.

Claus Stampe, chief investment officer at PensionDanmark, told IPE: "We are looking at other possibilities and expect to increase our exposure to Africa over the coming year."

That said, the pension fund does not see its exposure to the continent growing to more than 2% of total assets over the next two to four years, he added.

PensionDanmark had total assets of DKK88.3bn at the end of 2009.

Africa specialist UK manager Duet Asset Management launched the Duet Africa Funds in 2007, investing mainly in Nigeria, Kenya, Botswana and Mauritius and targeting the retail, telecommunications and financial sectors.

With this investment, PensionDanmark said it had become the largest investor in the fund. 

Stampe said: "We expect the stable growth in the region to continue. At the same time, shares are cheaper than those in, for example, Asia and Europe because most investors have still not opened their eyes to the positive development in Africa over the last few years."

He said mid-Africa had seen average annual GDP growth of more than 5% since 2001. Even during the financial crisis of 2008-09, the region maintained growth of at least 2%, he said.

Stampe said it was PensionDanmark's first investment in a fund specialising only in African shares, although it had been invested in more mature markets in Africa since launching its internal Emerging Markets portfolio back in 2008.

"This portfolio gives us an exposure to markets such as South Africa, Egypt and Morocco, all rather mature markets, whereas the Duet Index fund will give us an exposure to much less developed markets located in the region south of Sahara and north of South Africa," Stampe said.

He said the pension fund was aware of the political risks in the region, but that investing in a number of countries would control the risk.

"Furthermore," he added, "one reason for choosing Duet Asset Management is a very selective approach to the countries they invest in, where they avoid countries with significant political risks."
 

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