Fund managers investing in Europe, the Middle East and
Africa are eyeing Ukraine, Romania, Nigeria and Kenya for deals
over the next year, according to Institutional
Investors research group.
II surveyed 214 fund managers at 154 investment
companies, asking which countries are top of the list for
travel in the next 12 months for current or potential
investments. Ukraine was No.1 with 32 percent of respondents
prioritizing the country, followed by Romania at 26 percent,
Nigeria at 25 percent and Kenya at 24 percent.
Ukraines agricultural sector is increasingly
attractive to investment managers as it has one of the best
land banks for agricultural product cultivation globally,
according to asset management firm Union Investment. The
interest is a turnaround from three years ago when the Financial Times reported that recent
political upheavals were turning institutional investors
cold on the country.
Sergey Dergachev, lead portfolio manager for emerging market
debt at Union Investment, says Ukraine benefits from a
low-cost base, and that its agricultural companies are
well-managed and mainly focus on exports. The companies have
shown they can cope with a challenging economic and political
risk environment exceptionally well, Dergachev said.
[II Deep Dive: Private Equity and VC Investors Pile Into
IIs research group found that investors who
are most bullish on Ukraine are based in Russia and other
countries in the Commonwealth of Independent States, as well as
Eastern and Central Europe. CIS countries also include Armenia,
Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova,
Tajikistan and Uzbekistan. Investors in the U.K and U.S. were
next in being most bullish on Ukraine, according to
Hedge funds were the most likely to say they would be
traveling to the country in the coming 12 months, with 52.5
percent saying they would do so, compared with 27.6 percent of
traditional fund managers.
Investors based in Eastern Europe and Russia prefer Romania
and Ukraine, while those in the U.K. and Western Europe are
looking to explore Kenya and Nigeria for investment in next
year, according to IIs survey.
Ross Teverson, head of strategy for emerging markets at
Jupiter Asset Management, says the banking sector in Kenya and
Nigeria is appealing for stock investments, as shares are
relatively liquid and fund managers may build a decent-sized
position. Teverson, who is invested in banks in both Nigeria
and Kenya, said the management teams are frequent travelers to
London, ensuring that shareholders in the U.K. get sufficient
updates on corporate plans.
If you look at the valuations of banks in those
markets, they are still very attractive relative to most other
equities globally, he said. These banks operate
with a simple, traditional, model with low-cost deposit
franchises and take relatively little risk.
Other markets that have become more of an interesting
investment opportunity over the past 12 to 18 months
include Ghana and Kuwait, according to IIs
Emerging Europe, Middle East and Africa survey.