Gemcorp to Invest $10 Billion in Private Credit Push Into Africa
The emerging markets-focused investment firm Gemcorp Capital LLP is looking to invest at least $10 billion in Africa over the next decade, mainly in the form of debt deals in partnership with other institutional investors.
Atanas Bostandjiev, the London-based founder and CEO of the firm, said in an interview that the investment is intended to help address the “enormous funding gap” in Africa and take advantage of the “strong prospects for growth” on the continent. Bostandjiev, a former Goldman Sachs Group Inc. partner, previously ran VTB Capital, the U.K. unit of the Russian state lender, VTB Bank PJSC.
Globally, private credit firms have amassed roughly $1.2 trillion dollars of assets under management, but most fund managers engaged in the strategy have not strayed far beyond Europe and North America, deeming emerging markets too risky and in need of too much institutional expertise to master. Among the other funds that invest in the region are Enko Capital and Altica Partners.
Gemcorp has already deployed $6 billion in Africa, out of the $7 billion it has invested overall, since it was founded in 2014. “You see investors competing for the same deal in developed markets whereas in the countries where we operate, in most cases, we are the only capital provider,” Bostandjiev said. “When you got that natural alpha, you beat the competition.”
Returns on Gemcorp Fund I Limited, a $547 million emerging-market focused fund set up in 2014, were on average just under 11% per year since 2017, outperforming peers, according to a HSBC review of investment funds’ performance published in mid-March. The company generated 13% and 16% returns in 2021 and 2020, the report showed.
African Strategy
Gemcorp, which currently has roughly $1 billion of assets under management and another $1 billion wrapped up in co-investments across emerging markets, avoids local-currency exposure to limit losses and replicates what private credit firms do in the developed markets, Bostandjiev said.
Among the firm’s investments in Africa, Gemcorp has provided financing to Africell, a mobile phone operator with 15 million subscribers in four countries and JUMO, a fintech company.
In future, the group plans more co-investment deals with strategic investors including pension funds, endowments and sovereign wealth funds in addition to its current international institutional investors.
Countries such as Ghana, Kenya, Uganda, Zambia, Angola, Liberia and Tanzania provide good potential for investors due to their young populations and funding gaps, he added.
Beyond Africa
With Russia’s invasion of Ukraine hitting the finance infrastructure supporting Eastern Europe’s grain exports, Bostandjiev said Gemcorp is working with its partners in Romania and Moldova to fund the flow of commodities.
The firm will look to invest more capital in the region to diversify energy supplies away from Russia, the CEO added.
