Africa Opportunity to offer switch to realisation pool – “In accordance with the prospectus dated 28 March 2014 a continuation vote will be put to shareholders this year, which will take place at a general meeting at the time of the company’s AGM, which is currently expected to take place in June 2019. The continuation vote will be put to shareholders together with a number of other proposals which will include a tender offer in a similar structure and format to that conducted in 2009, in which the assets are divided into a continuing pool and a realisation pool, together with changes to the management fee structure, whereby it is proposed that no further asset based management fees or incentive fees will be charged against the realisation pool, and instead the manager will be paid 2% of capital distributed to shareholders if such distribution takes place prior to 31 December 2019, and reducing thereafter. A circular containing full details of the proposals is expected to be published in the coming weeks.”
The announcement came alongside the publication of the fund’s results for 2018 which disclosed that the net asset value per share fell 27% while its share price declined by 19%. The manager describes this as dismal. “Q4 performance was dominated by sharp price declines in its major holdings – Enterprise Group, Sonatel, and its investment in Kosmos Energy. Enterprise Group declined by 26% in Q4 and 44% in 2018; Sonatel fell by 21% in Q4 and 28% in 2018, and Kosmos fell by 56% in Q4 and 40% in 2018.” the manager says that it plans to “concentrate the fund’s holdings in our best and most undervalued investments and to sell everything else.”
[QD comment: It will be interesting to see how much of the fund is left in the ongoing pool after this realisation opportunity. Running with a very concentrated portfolio adds an additional level of risk over those already associated with investing in emerging and frontier markets. An equivalent private equity investor might at least have some influence and additional insight into the success of its investments but this is not the case with Africa Opportunity.]
AOF : Africa Opportunity to offer switch to realisation pool