Johannesburg - Cobus Visagie recalls making 18 tackles the day South Africa’s national rugby team entered the World Cup record books to defeat England. Now, after swapping his boots for banking, the ex-Springbok is chasing investor cash for his first Africa investment fund.
The 41-year-old has partnered with Jonathan Kruger, a former money manager with Prescient Ltd, to raise $150 million for the Africa Merchant Sub-Sahara Fund. That puts them in a field that already includes the likes of Templeton Emerging Markets Group’s Mark Mobius, Goldman Sachs Group and BlackRock., which are buying into the world’s fastest- growing developing market outside Asia.
“When you start out as a rugby player, it’s quite daunting,” Visagie said by phone from London last month. “You meet the older guys of the game and you have to compete with them. In the same way, it’s what we’re doing at the moment.”
Funds are springing up in the sector as African stocks beat average returns in emerging markets, and bourses try to spur initial public offerings to boost trading. At least 19 funds focused on Africa started business in 2014, compared with 15 in 2013 and nine the previous year, according to data compiled by Bloomberg. The MSCI Emerging Frontier Africa Index excluding South Africa returned 33 percent in the five years through 2014, compared with 11 percent for the MSCI Emerging Markets Index.
It’s not all blue skies when investing in Africa, as shown by a slide in Nigerian markets amid a drop in oil prices. The Nigerian Stock Exchange All Share Index lost 13 percent this year after a 16 percent decline in 2013, which followed a rally of about 80 percent over the previous two years. The gauge has posted annual losses in four of the past seven years. The naira has weakened 20 percent over the past six months, the most among 24 African currencies tracked by Bloomberg.
Private equity
Visagie, whose rugby position as tighthead prop was to support the side of the scrum, quit the sport in 2009 after ending his career at London-based Saracens. Three years later, he helped start Africa Merchant Capital, a corporate-finance business headquartered in the city.
He was involved in finance before a career in professional rugby. After completing his Bachelor of Commerce degree from the University of Stellenbosch with honours, Visagie became a chartered accountant and worked for PricewaterhouseCoopers for seven years until 2003, when he moved to England. He later joined Templewood Merchant Bank, where he was principal for Africa.
“I’ve invested in African businesses in the time I was playing rugby as well,” Visagie said. “I invested as a private equity investor in businesses operating in sub-Saharan Africa, in real estate, aviation and agriculture.”
England ‘drilled’
The former player’s enduring memory of the 29 times he played for the Springboks, as South Africa’s national team is known, was the 44-21 victory against England at the Stade de France, Paris, during the 1999 Rugby World Cup.
The forwards “drilled England into submission”, he said, giving flyhalf Jannie de Beer room to kick over a record five drop goals, according to ESPNscrum.com.
Visagie’s company expanded into money management in December with its Africa Merchant Sub-Sahara Fund, which has already bought stocks in Nigeria, Ghana, Kenya and Botswana, Visagie said in the February 6 interview. He declined to give details on how much they have raised.
The fund is limiting its size to ensure it can buy less- traded shares after sifting through potential targets, analysing the companies and the markets in which they operate.
“We don’t invest thematically or from a macro view,” Visagie said. “It’s a fundamental bottom-up stock selection.”
Kruger, 30, started an Africa fund for Cape Town-based Prescient in 2011 before travelling across east and southern Africa for two months and joining Visagie in September 2013.
Economic growth
The Prescient Africa Equity Fund returned 48 percent in 2012, compared with 43 percent for the MSCI EFM Africa Ex-South Africa Index, according to data compiled by Bloomberg. It was the top performer in South Africa that year, according to Prescient’s website. It says it has the equivalent of $763 million under management.
Sub-Saharan Africa will probably expand 4.9 percent this year from 4.8 percent in 2014 and compared with a global outlook of 3.5 percent for 2015, according to the International Monetary Fund. Nigeria’s economy, Africa’s biggest, grew at 5.9 percent in the fourth quarter of 2014, the slowest pace in more than a year, as the economy gets buffeted by an almost 50 percent drop in the price for oil since June. The commodity accounts for almost all of the nation’s export income.
Africa Merchant has invested in Guaranty Trust Bank PLC and Zenith Bank PLC, Nigeria’s largest lenders. Lagos-based Guaranty has dropped 7 percent this year and Zenith is down 2 percent. It also bought shares in Seplat Petroleum Development Company, which has gained 27 percent, the nation’s second-best performing stock in 2015.
Quality companies
Investing and rugby have similarities because both require a game plan, according to Visagie.
“As a long-term investor it’s about buying quality companies at attractive levels,” Kruger said.
With his rugby days over, Visagie is building his six-year- old son’s interest in the sport, while bumping into former teammates such as Chris Roussow, Ollie Le Roux and Gary Teichmann, who are also pursuing opportunities in sub-Saharan Africa, he said.
Success is all about “confidence and entrepreneuralism”, Visagie said. “The future of Africa lies ahead.”
* With assistance from Zimri Smith in London
Bloomberg