Robert Scharar, president and CEO of FCA Corp in Texas, United States, is the second person to develop an exclusive Africa fund for Americans to have a vehicle to take part in Africa’s growth.
“[The 250 million dollar fund] is fairly new. We started it to invest in public companies traded on the African stock exchanges. Our original investments were more private funds, although they were in public companies,” Scharar told CNBC Africa.
“For example, we’re involved in Malawi in NICO Holdings, which is an insurance group in five countries, but the current fund is really focused on a pan-Africa perspective of publically-traded African companies.”
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FCA Corp is also present in South Africa, where majority of their fund is invested, in firms such as Grindrod Limited and Discovery.
“Our strategy for being in South Africa is that a lot of South African companies are really engaged in Africa itself. We’re looking for opportunities to use an established market like the South African market to be able to to get pan-Africa exposure,” Scharar explained.
Scharar added that the fund however has a particularly different approach to Africa’s markets, and that Americans buying index shares would largely give them exposure to the larger mining and financial institutions in the country.
“We believe the story in Africa is a consumer story, and we want to be in a broader base of companies, so you’ll see we’re really underweighted for example in the mining industries. We try to reach out to other businesses. We like the financials services groups, the insurance groups. We’re seeing remarkable things happen across the continent,” said Scharar.
“While resource companies will be a big part of the African story, we think there are other opportunities. In my own experience of over 20 years leads me to believe that we want to be in companies that provide goods and services to the growing consumer class in Africa.”
The fund’s size is however small compared to others, and Shafar explains that much of America is yet to fully buy into the African growth story. The good investment returns from pervious ventures into the continent prove the high rewards.
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“The American investor’s main options would be to buy either the index share or they would buy a few of the American depositary receipt shares. They’re not going to really be able to buy a lot of other smaller caps stocks or give them to the other markets in Africa. We’re really trying to give them a broader exposure,” said Scharar.