Many of the largest institutional pension funds making their way through South Africa on a roadshow to review possible private equity offerings. In a news piece this morning Martin Arnold of the FT said that "investing in private equity in Africa a few years more than doubled the size of the USA, Europe, Middle East and Asian institutional investors, their share in new markets and increase have tried to diversify their portfolio. "South African private equity firms raised $ 1BIn 2005, $ 2.35B in 2006, and now with a few months time when they go up to over $ 2B in additional investments for the year 2007.
China, India and South Africa?
The explosive growth in China and India in the last 5-7 years really sparked the interest of investors large and small because of their apparently weak correlation with the U.S. equity market and high yields. The reason why pension funds go in South Africa is that all the steps it needs to make well-diversifiedRisk management. If they invest in a few international private equity firms, these companies probably in more places than just China and India basis. Many pension funds hire institutional consultant to run the very edge of their ability to create a risk budget to pay portfolio optimization analytics which include the correlation of returns in different national markets and recommendations on the basis of this analysis.
What's next?
Usually begins, which in the institutionalInvestment world eventually pushed down through the bank channels, investment platforms, broker-dealers and retail customers. I would guess that in 3-5 years there are a couple of South African funds and ETF products that do well during the growing hedge fund and private funds into the region in the future.
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