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  • 1. Investec Africa & Middle East Fund
  • 2. Target audience
    This document is only for professional investors, professional financial advisors and, at their exclusive discretion, their clients. No other person should rely on the information contained in this document.
    If you plan to show this to your client please ensure that you comply with any applicable local marketing regulations.
    This document is not to be generally distributed to the public.
  • 3. Agenda
    Introduction to Investec Asset Management
    The case for Investing in Africa and the Middle East
    The market outlook for Africa and the Middle East
    Investec Africa & Middle East Fund
  • 4. UPDATE QUARTERLY
    mercurygdriveDeptsMarketingInvestor CommunicationsRFPRFP ContentCompany Level InformationStaff NumbersHeadcount statistics
    UK
    Staff: 260
    Investment professionals: 71
    Americas
    Staff: 14
    Asia Pacific
    Hong Kong: 16
    Taiwan: 20
    Australia: 3
    Southern Africa
    Staff: 337
    Investment professionals: 57
    Investec Asset ManagementDistinctly African but with a global perspective
    Independently managed investment specialist, wholly owned subsidiary of Investec Group
    Founded in South Africa in 1991 by current leadership
    $94bn under management
    Largest manager of third party assets in Africa with approximately $41bn of client assets invested in the African continent
    Distinctly African but with a global perspective
    In the following Presentations:
    GDG Inst
    Assets Under Management*
    Southern Africa: $45.0bn
    UK & Offshore: $49.4bn
    Total: $94.4bn
    Distribution
    Investments and Distribution
    Staff numbers exclude temps and contractors
    *All AUM data as at 31 March 2011
    Staff data as at 28 February 2011
  • 5. Frontier investments are among our core capabilities
  • 6. A Summary of our Frontier Markets Business
    IAM Location
    Source: Investec Asset Management, September 2010
    *Based on capital commitments as at September 2010 and earmarked Africa (ex SA) allocation
  • 7. A Summary of our Frontier Market Fund Range
    Source: Investec Asset Management, 31 August 2010. These are internal parameters and subject to change, not necessarily with notification to investors. The above shows the Fund investment strategies currently run by Investec Asset Management’s Frontier Team. The Fund(s) may not have been registered, verified or approved for marketing by the relevant supervisory authorities outside of the Funds’ domicile. Please visit www.investecassetmanagement.com/registrations to check registrations by country. Details of these Funds may only be distributed, disseminated, forwarded or have its contents disclosed in accordance with local marketing regulations. Responsibility for compliance with such regulations shall be your sole responsibility.
  • 8. UPDATE MONTHLY
    Track record for our Pan Africa less liquid strategyPerformance as at 31 March 2011, net of fees
    Calendar performance (in USD) as at 31 March 2011
    * Inception date: 30 November 2005
    Past performance figures are not audited and are not indicative of future performance, which may vary
    Source: Lipper to 31.03.11, NAV based (inclusive of all annual management fees but excluding any initial charge) gross income reinvested, in US dollars. Performance shown is of A shares and would have been lower had any initial charge been included. Returns to individual investors will vary in accordance with their personal tax status and tax domicile. The Fund has not been registered, verified or approved for marketing by the relevant supervisory authorities outside of the Fund’s domicile. Details of the Fund may only be distributed, disseminated, forwarded or have its contents disclosed in accordance with local marketing regulations. Responsibility for compliance with such regulations shall be your sole responsibility.
  • 9. The markets of Africa and the Middle East
    Libya
    Morocco
    Tunisia
    E
    Cape Verde
    BRVM
    Sudan
    Nigeria
    Uganda
    Kenya
    Benin
    Burkina Faso
    Mauritius
    Guinea Bissau
    Cote D’Ivoire
    Zambia
    Mali
    Botswana
    Zimbabwe
    Niger
    Namibia
    Moçambique
    Senegal
    Swaziland
    South Africa
    Togo
    ... from Johannesburg to Jordan
    Lebanon
    Gulf Cooperation Council (GCC)
    BVMAC planned for Gabon
    Angola stock exchange proposed
    Turkey
    Algeria re-vamping its bourse
    Kuwait
    Jordan
    Bahrain
    Egypt
    Qatar
    UAE
    Oman
    Saudi Arabia
    Ghana
    Cameroon
    Rwanda
    Tanzania
    Malawi
    Source: Bloomberg and African Alliance Securities Research, December 2010
  • 10. Africa and the Middle East in context
  • 11. Growing faster than most other regions of the World
    Compound annual real GDP, 2000 - 08%, constant exchange rates
    African annual real GDP, 2008$ billions
    Compound annualgrowth rate, %
    Source: International Monetary Fund; World Bank World Development Indicators; McKinsey Global Institute, June 2010
  • 12. Africa: Rising labour productivity and household consumption
    Five year moving average of annual labour-productivity growth
    The consumer sector is already more than 50% of all industries in Africa
    Labour productivity growth (%)
    Brazil, China and India
    Africa
    United States
    Brazil, China and India
    Western Europe
    Africa
    1980
    1990
    2008
    2000
    United States
    Source: Global Insight; United Nations Conference on Trade and Development;
    McKinsey Global Institute, June 2010
    Western Europe
    Source: Groningen database, BCG analysis
  • 13. Africa’s quality of life metrics are noticeably improving
    Infant mortality: Almost halved from 1960 to present
    Immunisation rates: More than doubled to 73% from 1985 to 2010
    Primary school completion: From 50% in 1999 to 63% in 2010
    Life expectancy: From 41 years in 1960 to 52 in 2007, notwithstanding HIV Aids
    Mobile cellular subscriptions: From 1% in 1998 to 32% in 2008
    Sub-Saharan Africa, 1980-2030Real GDP per capita, 2009 US dollars
    Source: IMF WEO, Standard Chartered Research, Other sources: McKinsey Global Institute, June 2010
  • 14. MENA: Strong balance sheets and demographics
    EMAILED FROM TAREK
    LAST UPDATED: 14/05/10
    Young demographics
    Attractive debt levels
    Egyptian population (Total million)
    Private Sector Debt (% of GDP) 2010E
    Government Debt (% of GDP) 2010E
    Saudi Arabian population (Total million)
    Source: Central bank data, Global Insight, Deutsche Bank research
    Source: U.S. Census Bureau, International Data Base, 2008
  • 15. Summary of case for investing in Africa
    • Africa is a large continent, both in terms of size and population, with huge resources
    • 16. Although it has an abundance of resources, it is not a commodity derivative - the GDP composition of its major markets, including South Africa, Kenya, Egypt and Nigeria, have a substantial service sector component
    • 17. The continent has experienced sustained political and economic reforms and substantial improvements in the quality of governance
    • 18. Levels of African sovereign debt have been falling, and are lower than their developed market peers
    • 19. Africa has outpaced world GDP growth since 2001 with declining inflation and interest rates over this period
    • 20. This offers a very attractive investment opportunity for a variety of compelling reasons
    • 21. Most countries operate from a low economic base with penetration of many services relatively low
    • 22. The capital structure of many African businesses tend to be unlevered
    • 23. There is a dearth of suppliers of capitalto capitalise on the opportunity
    • 24. As a result, Africa is starting to reap the benefits
    • 25. We believe peace and democracyis dawning on the Continent, overcoming occasional pockets of unrest
    • 26. Africans are generally more positiveabout the continent
    • 27. Private capital flowsto Africa have been positive
    • 28. The economies are more integrated with the rest of the world
  • Summary of case for investing in the Middle East
    • The Middle East is changing positively:
    • 29. Peaceful revolution in Egypt and Tunisia –should lead to more accountable governments
    • 30. Saudi Arabia – Pre-emptive reforms by the monarchy as the younger generation demands representation
    • 31. (The uprisings in Libya and Bahrain so far seem to involve tribal and sectarian undertones)
    • 32. Short term volatility in Middle East markets as the region moves away from ‘one-man ‘rule
    • 33. This strengthens the long term case for the Middle East: a large market, with a young populationand huge resources
    • 34. The Middle East offers various investment opportunities:
    • 35. Consumer growth: Young, increasingly affluent population as the Middle East develops and attracts talent
    • 36. Infrastructure: GCC countries must focus on non-oil sectors and address lack of power/water infrastructure
    • 37. Industrial expansion: A low cost producer of many essential goods, with ever growing markets in the East
    • 38. Liberalising markets: Restricted markets gradually allowing foreign access, eventually boosting flows
    • 39. Liberalising culture: Emancipation from large family homes boosting urban development
    • 40. The Middle East is and will remain economically sound
    • 41. Strong balance sheets, low debt to GDP
    • 42. Accumulated wealth reduces sensitivity to incremental changes in the oil price
    • 43. (Dubai debt crisis was no surprise, is being resolved and was never a reflection on the wider region as a whole)
  • Outlook amid political uncertainty
    • Sub-Saharan Africa:
    • 44. Nigeria elections were mostly smooth; investors to focus on economic growth, reform
    • 45. Other holdings in Sub-Saharan Africa unlikely to see MENA-type unrest in the foreseeable future
    • 46. North Africa:
    • 47. Post-revolution Egypt:
    • 48. Short term weakness in corporate earnings, a result of disruption in Q1 2011
    • 49. Election scenarios:Pro-business Islamists compete with pro-business secularists in an environment in which populist rhetoric is ‘flavour of the day’
    • 50. Longer term, the revolution should prove a very positive development, curbing corruption and energising the youth. Policy changes will be measured and will take growth and FDI into consideration
    • 51. Arabian Gulf:
    • 52. Bahrain unrest now under control, arguably had sectarian roots
    • 53. Qatar, Kuwait, the UAE are unlikely to see similar unrest; small, mostly expat populations
    • 54. Saudi Gov’t has so far prevented demonstrations and has taken measures to support the equity market
    • 55. Though richer, Saudi Arabia has parallels with Egypt – a young, increasingly educated population
    • 56. We are cautious of Saudi Arabia in the short term as the equity market reflects uninterrupted stability
    • 57. Longer term, Saudi Arabia has a breadth of companies and the resources to grow its industrial base
  • An experienced investment team focused on emerging and frontier markets
  • 58. Our investment philosophy
    We invest with a private equity mindset:
    Fundamental, on-the-ground research
    Long term approach to value creation
    Approach any investment as a partnership with company management
    We identify potential opportunities by:
    Using the Investec business network
    Regular visits to markets and companies: over 170 country visits and 1,400 company visits¹ since 2005
    We buy companies when:
    Our fundamental research confirms significant latent value over the medium to long term
    We sell when:
    Management actions disappoint and significant better value can be found elsewhere
    Valuation changes to the extent that sustainable returns of 15%+ seem unlikely
    Changes in economies / regulations have a major negative impact on the operating environment of the company
    1: For Investment Team as a whole
  • 59. Our investment process aims to identify high quality companies with high return potential
    Companies elsewhere Junior Plus Senior International Bourses Eg. London, AIM, TSX, etc.
    AME companies listed in Frontier markets
    27 Bourses, 2,700+ securities
    Size, liquidity, 50% of NAV based in AME
    Size, liquidity, foreign restrictions
    70+ securities
    250-350 securities
    Investment Shortlist
    Frontier Investment TeamMacro + Strategy Team InputsIAM Industry Specialist as Needed
    Country and Company Visits
    Analysis and Research Database
    Equity Ideas
    Filter
    Portfolio Manager
    Universe
    Result of Bottom up Process
    AME Fund
    Fund
    As at end of March 2011
  • 60. Update
    Monthly
    Investec Africa & Middle East FundInvestment exposure as at 31 March 2011
    Sector weightings*
    Country of listing*
    Cash % in footer
    The cash content of the Fund as at 31.03.11: 40.3%
    The portfolio is actively managed and may change significantly over a short period of time
    *As a percentage of the equity holdings
    This data is preliminary data.
  • 61. Investec Africa & Middle East FundTop 5 holdings
    The portfolio may change significantly over a short period of time. This is not a buy or sell recommendation for any particular security. Data as at 31.03.11
  • 62. Update
    Monthly
    Investec GSF Africa & Middle East Fund DetailsPerformance as at 31 March 2011, net of fees
    Performance
    Past performance should not be taken as a guide to the future and there is no guarantee that this investment will make profits; losses can be made.Source: Lipper to 31.03.11, NAV based (inclusive of all annual management fees but excluding any initial charge), gross income reinvested, in US dollars. Performance would be lower had initial charges been included and will vary between different share classes dependant upon their applicable charges. Returns to individual investors will vary in accordance with their personal tax status and tax domicile.
    * Inception date 30.04.08
  • 63. Important information
    This communication is not for general public distribution. If you are a private investor and receive it as part of a general circulation, please contact us at +44 (0)20 7597 1900.
    The value of this investment, and any income generated from it, will be affected by changes in interest rates, general market conditions and other political, social and economic developments, as well as by specific matters relating to the assets in which it invests. Past performance should not be taken as a guide to the future and there is no guarantee that this investment will make profits; losses may be made.
    All the information contained in this communication is believed to be reliable but may be inaccurate or incomplete. Any opinions stated are honestly held but are not guaranteed and should not be relied upon. This is not a buy, sell or hold recommendation for any particular security. The portfolio may change significantly over a short period of time.
    This communication is provided for general information only. It is not an invitation to make an investment nor does it constitute an offer for sale. The full documentation that should be considered before making an investment, including the prospectus and simplified prospectus or offering memorandum, which set out the fund specific risks, is available from Investec Asset Management.
    This communication should not be distributed to private customers who are resident in countries where the Fund is not registered for sale or in any other circumstances where its distribution is not authorised or is unlawful. Please visit www.investecassetmanagement.com/registrations to check registrations by country. In Switzerland, the Africa & Middle East Fund’s Simplified Prospectus, Prospectus and Report & Accounts may be obtained free of charge from the Swiss Representative and Paying Agent, RBC Dexia Investor Services Bank S.A., Badenerstrasse 567, P.O. Box 101, CH-8066 Zurich.
    In the USA, this communication should only be read by institutional investors, professional financial advisers and, at their exclusive discretion, their eligible clients, but must not be distributed to US Persons.
    THIS INVESTMENT IS NOT FOR SALE TO US PERSONS.
    Telephone calls may be recorded for training and quality assurance purposes. Issued by Investec Asset Management, May 2011.