MEA July 2017

60 MEA MARKETS / July 2017 , Barak FundManagement has evolved over its seven years of existence into a team comprising twenty investment professionals, with vast experience across commodity derivative and physical commodity trading, structured trade and commodity finance and international banking in Africa. We interviewed the fund’s Investor Relations Officer, Giles Hedley to find out more as we celebrate the firm’s success in receiving the prestigious Leader in Fund and Investment Management award. Invest in Africa Barak Fund Management was founded on the back of smart thinking in the tight liquidity constraints of sub-Saharan Africa. The two founders, Prieur du Plessis and Jean Craven, both hailed from banking backgrounds and had time and time again seen potential lucrative deals being overlooked because they did not fit traditional financing structures. The fund’s Investor Relations Officer, Giles Hedley reveals more of the firm’s background and growth over the years. “Prieur and Jean acknowledged that doing business in sub- Saharan Africa was no easy feat, however realised that from their experience, the potential yields in the region from an alternative financing perspective were far greater than they had been dealing with in their respective banking-sector transactions. “The Barak team has grown steadily over the years as both deal implementation and investor interest has grown, with this team now boasting an impressive on- the-ground footprint in all parts of the sub-Sahara African region. Both strong investor relations and a rigid client-sourcing network has been the top priority for all at Barak, and the continued success of the story is based on this consistently solid foundation. “From the launch of the Barak Structured Trade Finance Fund in February 2009, the company has built up a strong reputation in the trade finance value chain in over 30 countries in Africa. With consistent performance and no negative months seen by the STF Fund, the global exposure from investor interest that the fund has reached has grown considerably since 2009. “The investor reach includes family offices, the high-net- worth individual (HNWI), fund of funds, pension funds, and more recently a strong sentiment from many large global institutional investors and niche assets managers. The AUM of the fund as at the beginning of 2017, is more than $450 million (up 80% from beginning of 2016), with the pipeline continuously growing each quarter.” Giles adds that two more funds were added in 2014, being the Barak Impact Finance Fund and the Barak Shanta Commodity Fund, plus his reflections on the Barak story so far. “The thought process of the fund manager has always been to add value in the African trade markets wherever the opportunity lies, and in early 2016 the demand for longer-term financing outside of Barak’s trade finance core focus arose. Hence, the Barak Mikopo Fund (African medium-term developmental asset-backed credit) and the Barak Asha Fund (African Impact long-term agri-project financing) were launched mid-2016, to address this growing demand for our existing and prospective pipeline of longer-term funding opportunities. “The sixth fund to be added to the Barak product suite, was the Barak Shariah Trade Finance Fund, which looks to bring on board a growing investor demand out of the Middle East. The Fund, like the STF and Impact Finance Fund, focuses on short-term lending into African trade. “The Barak story thus far has been one of consistency, reliability and the ability to go into places within African financing that traditional capital providers cannot, or will not. The trading markets in Africa, be it short, medium or long term, hold exciting and unique opportunities. So, the Barak team remains committed to investors to seek out these opportunities to continuously provide the yield- seeking, correctly risk-adjusted performance that it has become globally renowned for.” Why Africa will provide future growth With a wealth of natural resources, developing infrastructure, and improving business environment – in addition to a working population of 600 million, set to double by 2040 – Africa has emerged as an attractive investment destination and a key market for trade. Giles explains why now is the right time to invest in the region, which has a challenging trade gap to fill. “The premium for investment is ripe provided an asset manager possesses the skills and experience to take advantage of this business environment, and this is exactly where Barak has positioned itself. However, post- 1705ME02 crisis regulation and the resulting trade finance gap is halting its progress. “The African Development Bank estimates this African trade finance gap to be between US$110 – 120 billion, leaving many trade-reliant companies in Africa of all sizes in dire need. Hardest hit are the SME companies within the continent, many of whom largely contribute to the functioning of Africa’s smaller countries’ economies. “Barak truly believes the rate of return on its investments in Africa, from its historic short-term activities to its looking ahead at longer-term strategies, will continue to abound and the Barak team remains committed being the leading alternative financier in the region.” Giles closes by summarising the main benefits of investing in the region of Africa. “In terms of GDP, Africa is the second-fastest-growing region in the world. We believe that the rate of return on investment is higher than anywhere else in the world. In addition, Africa is now in the age of consumerism with the prediction of being the world‘s leading consumer market by 2050. “Also, I believe that doing business in Africa is now easier. The region is now home to more international private firms due to the increasing adoption of seamless business policies, lowered corporate taxes and strengthened regulatory and legal systems in some African countries.