By Colin McClelland
(Bloomberg) — Enko Capital Management LLP is starting a $200 million bond fund that will focus on African sovereign and corporate debt to provide investors with yields higher than those available in developed markets.
African and European institutions are backing the fund, which aims to eventually raise as much as $1 billion, and has so far invested in Zambian, Ghanaian and Nigerian government bonds, Alain Nkontchou, managing partner of Enko Capital, said by phone from London. Enko seeks to invest in sub-Saharan debt outside of South Africa with three- to four-year terms and annual yields of 8 percent to 10 percent in dollars, he said.
“The lack of money coming into Nigeria and Africa generally has led to decent spread conditions that are a good opportunity to invest,” said Nkontchou, 53. “Nigeria has room to expand its borrowing because its debt stock is actually low compared to the economy.”
It only considers corporate debt backed by collateral, strong cash flows and decent credit ratings, he said. The firm also manages a $76 million private-equity fund invested in financial companies in Nigeria where valuations are attractive, said Nkontchou. It runs a $20 million stocks fund invested in listed African companies deemed ready for growth, such as agriculture and consumer-facing business in Kenya and Ivory Coast, he said.