Over Africa Opportunity Fund (AOF) interim results period to 30 June 2020, the NAV fell by (14%). Accounting for dividends and redemptions, the NAV decline was (7%).
At the period end, equities accounted for 79% of the portfolio, debt took up 5% and unencumbered cash was responsible for the remaining 16%.
As a reference, AOF notes the following: “During this period in USD, the S&P fell 3%, Brazil fell 40%, Russia fell 20%, India fell 20%, and China rose 2%. In Africa, South Africa fell 23%, Egypt fell 20%, Kenya fell 19%, and Nigeria fell 10%. Three Africa-focused ETF funds – the Lyxor ETF, the DBX MSCI Africa top 50, and Van Eck Africa index, fell, respectively, 12%, 26%, and 19%.”
Realisation progress made – targeting 1-2 years to sell the remaining portfolio
The manager report issued today notes that “AOF made progress realising and distributing the proceeds from its more liquid portfolio holdings during H1 2020. The COVID-19 pandemic and the global outbreak of national lockdowns account for the sharp market declines of H1 and the depreciation of many African currencies. The Zambian kwacha depreciated by 23% against the US dollar, the Botswana pula by 10%, and the Kenyan shilling by 5% to cite a few examples. The fund sold its entire holdings of Anglogold Ashanti, Goldfields, Kosmos Energy, Continental Reinsurance, Alexandria Containers, CEC Africa, Fastjet, Multichoice Group, Vodacom, and debt of MTN Group. Except for the Continental Reinsurance disposal pursuant to a corporate transaction, all the disposals were made in the market. The worst and best disposals took place in the natural resources portfolio, in response to the 38% fall of Brent Crude from $66 to $41 and the 18% rise in gold to $1,781 at the end of June.
AOF is in the process of realising its holdings. Two distributions were made during H1 2020 in the form of compulsory share redemptions worth a total of $24m. The portfolio is now comprised of less liquid holdings and we are looking to the next 1-2 years to effectuate a realising of the remaining portfolio.”
AOF: Africa Opportunity Fund makes realisation progress