Africa is experiencing the strongest growth in new sovereign wealth funds in the world as its nations are amassing commodity revenues and foreign-exchange reserves, according to JP Morgan Asset Management.
During the past two years, 15 state funds have been set up or are being considered in Africa, Bloomberg quoted the group’s global head of sovereigns, Patrick Thomson, as saying.
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The region would see more starting in coming years, he added.
In October 2012, Angola set up its US$5 billion state fund, Uganda said in April it planned to create a sovereign fund, and Nigeria inaugurated its US$1 billion fund eight months ago.
"We expect the number in Africa to grow further over the coming years," Thomson said. There are two main reasons why more state funds are being set up in Africa — "it’s the growth in commodity prices, and it’s the growth in foreign exchange reserves," he reasoned.
Africa was catching up with many Asian and Middle-East countries that already had a state fund, Thomson said.
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By GlobalDataLatin America was expected to see the second-strongest growth in the number of new funds, he said, without elaborating.
However, Thomson, who advises state entities such as wealth funds, central banks and pension funds, declined to name particular countries as candidates for new state funds.
Sovereign funds around the world were shifting their investments from the developed world into emerging-market assets, Thomson said. They were buying mostly debt and equity in public markets in developing regions, he said, without quantifying.
State funds were also increasingly joining forces in their investments, partly investing in alternative assets, such as infrastructure and real estate, including airports and utility companies, Thomson said.
