Fundo Soberano de Angola announces 2015 investment update

Jose dos Santos 600x

José Filomeno dos Santos, chairman of FSDEA

PRESS OFFICE: Djembe Communication

Today, Fundo Soberano de Angola (“FSDEA” or “The Fund”), Angola’s sovereign wealth fund, released an investment update for the year ended on December 31, 2015.  FSDEA also announced that, during last year, it was authorised by the Ministry of Finance of Angola to start the adoption of the International Financial Reporting Standards (IFRS) in the preparation of its financial accounts.

The Fund plans to fully transition its bookkeeping and financial statements from the national accounting standards for financial institutions (CONTIF) to IFRS by 2017. This conversion will make its annual financial statements more comparable, understandable, consistent and substantial for analysts, researchers and general stakeholders across the various jurisdictions where it invests. IFRS are considered the most stringent reporting principles for the disclosure of financial results in the world. This transition follows the 2014 announcement that all Angolan financial institutions must adopt IFRS in 2016, issued by the Central Bank of Angola, the entity that regulates the CONTIF.

José Filomeno dos Santos, chairman of FSDEA, stated “In June 2014, Banco Nacional de Angola, the country’s central bank, disclosed its IFRS implementation timetable, which reflects its determination to expand the supervision of the domestic financial sector. As an entity regulated by the government, and subject to the accounting standards drafted by the central bank for the financial industry, FSDEA’s Advisory Council authorised the Fund’s IFRS implementation schedule, in accordance with the timeline set for the domestic financial industry. Implementing the International Financial Reporting Standards makes FSDEA’s performance more accessible for international stakeholders and may boost co-investment funding from abroad. More importantly, adopting a standard that is streamlined, acknowledged and stringent ensures that FSDEA is easily comparable to any of its peers around the world.”

Whereas, FSDEA’s 2015 independent annual financial audit is underway, the highlights of its investment activity last year were the following:

  • The net asset value of the Fund’s portfolio is US$4.7bn;
  • FSDEA’s holds an internationally diversified portfolio allocated to private equity funds, fixed income assets, variable income assets, financial derivatives and cash.
  • Its private equity fund allocation amounts to 58% of the whole portfolio and focuses direct investments on Angola and sub-Saharan African countries:
  • 19% of the $1.1bn infrastructure fund’s investment are allocated to projects in Angola and Kenya;
  • 23% of the $500m hotel fund’s investment are allocated to hotel investments in Angola and Zambia;
  • 10% of the $220m timber fund’s investment are allocated to a large-scale eucalyptus concession in Angola;
  • 2% of the $245m mining fund’s investment are allocated to a mining venture in Mauritania;
  • 12% of the $190m mezzanine capital fund’s investment is allocated to an asset in South Africa;
  • Sizeable allocations for the $465m agriculture and healthcare investment funds in Angola are set to debut in 2016;
  • In total, $407m of FSDEA’s private equity $2.7bn allocation has been committed to direct investments in Angola and the wider sub-Saharan Africa region;
  • The investment period of FSDEA’s private equity funds is three to five years and their investment horizon is over 10 years.
  • FSDEA estimates that its planned $3bn allocation to private equity funds will be fully invested by 2020.
  • Fixed income assets represent 23% of FSDEA’s portfolio, or the equivalent to $1.08bn:
  • It predominantly consists of North American and European assets;
  • 49% are sovereign bonds and 19% are financial industry corporate bonds.
  • Variable income assets amount to $799m or 19% of the Fund’s portfolio, and have a higher geographical concentration in the United States and Europe.

José Filomeno added, “FSDEA’s capital of $5bn was fully paid in by the Government in 2014. We are encouraged by the FSDEA’s solid three-year progress. Despite global economic fluctuations, in 2015, we continue to invest its capital across several of industries and asset classes in accordance with the investment policy and guidelines set by the government. More than half of Fundo Soberano de Angola’s portfolio is allocated to private equity investment funds, which are focused on domestic and regional business opportunities. These equity investments will position FSDEA’s capital ideally to generate new sources of revenue for Angola, as well as to support the development of new industries, beyond the crude oil production and trading.”

Since 2014, the FSDEA had been establishing collective investment schemes to deploy private equity investments in high-growth sectors domestically and across the sub-Saharan region. Today, all $2.7bn of its private equity allocation consists of shares in seven collective investment schemes, which are certified and regulated by the Mauritius Financial Services Commission, and target investment opportunities in sectors that are strategic for the domestic and regional development of Angola. These sectors are infrastructure, real estate, agriculture, timber, healthcare, mining and mezzanine capital. Together, they reflect the policy objective of the Fund to generate long-term returns for the Republic of Angola and benefit its citizens by maintaining and creating wealth for the current and future generations.

About the Fundo Soberano de Angola

The Fundo Soberano de Angola (FSDEA) is a sovereign wealth fund wholly owned by the Republic of Angola. The Fund, established according to international governance benchmarks, will gradually diversify its investment portfolio across a number of industries and asset classes in accordance with its investment policy and guidelines. By pursuing investments that generate long-term and socially-enhancing financial returns, the FSDEA will play an important role in promoting Angola’s social and economic development and generating wealth for its people.

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Djembe comprises an organically-grown international network with local market presence in Angola, Ghana, Mozambique, Nigeria, Switzerland, United Kingdom, UAE and the USA. The consultancy’s continued expansion builds on its remarkable success achieved in just a year and half by providing leading industry recognised capabilities. In the first half of 2015, Djembe received a PRSA Silver Anvil Award of Excellence for the consultancy’s reputation management programme for the Fundo Soberano de Angola (FSDEA), Angola’s US$5bn sovereign wealth fund. Djembe was also a finalist for the Holmes Report EMEA New Agency of the Year, SABRE Awards EMEA Gold, and IPRA Golden World Awards, making 2015 a break out year for the young pan-African consultancy.