June 17, 2010 / 4:06 PM / 8 years ago

FUND VIEW-SABMiller, MTN among picks-Africa fund

* Brewer SABMiller, telecoms cos MTN, Safaricom attractive

* Rapid urbanisation of Africa provides opportunities

* World Cup could help S.Africa image

By Carolyn Cohn

LONDON, June 17 (Reuters) - Telecom companies MTN (MTNJ.J) and Safaricom (SCOM.NR) and brewer SABMiller SAB.L are among stocks favoured by a new U.S. mutual fund focused on Africa, as they take advantage of rising infrastructure needs and consumption.

Larry Seruma, manager of the Nile pan-Africa Fund, said movement in Africa towards big towns has thrown up the need for new housing, roads, airports, bridges, telecom connections and consumer goods.

“From Cairo to Cape Town, Africa is urbanising at a faster rate than India,” Seruma told Reuters in a telephone interview.

“Infrastructure is the theme of the next 20-30 years, another theme is consumer growth.”

The fund invests in African companies and companies listed outside Africa that have strong African businesses.

London-listed SABMiller is the world’s second-largest brewer, but gains 85 percent of its profits from the emerging markets of Latin America, Africa and Asia.

“SABMiller is the consumption story. They are expanding across the whole of Africa, they have been on the continent for a long time,” Seruma said.

South African mobile phone operator MTN, Africa’s largest mobile operator, has the benefit of long experience in Africa, while Kenya’s Safaricom, part-owned by British operator Vodafone (VOD.L), has developed money transfer and bill payment services by mobile phone, Seruma said.


    South Africa is the most liquid market in the fund, but South African exposure is limited to 25 percent, Seruma said.

    South Africa is likely to get a boost from the soccer World Cup, to its image at least.

    “For South Africa to grow, it has to increase exports. Hosting the World Cup is another way it can generate revenue,” Seruma said.

    “South Africa now has a stronger case to bid for the Olympics, for rugby, cricket. The marginal cost of hosting those games is going to be much lower.”

    South Africa’s economy will get a 0.3 percentage point boost to growth in 2010 from the World Cup, according to a Reuters poll. [ID:nLDE64P0FP]

    The number of stocks in the fund is not likely to exceed 40, Seruma said.

    The Nile pan Africa fund is unusual in being an actively managed Africa fund, Seruma said, rather than a passive fund which tracks an index.

    “We are seeing a lot of funds in the pipeline that are looking to see what we do.”

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