Positive Net Results equivalent to USD 44 million
Capital Gains in Private Equity Funds for Agriculture and Infrastructure
Concluded Procedure for the Adoption of the International Financial Reporting Standards (IFRS)
Luanda, Angola, 19 September 2017 – Today, Fundo Soberano de Angola (FSDEA), Angola’s sovereign wealth fund, announced its audited results for 2016, which reflect its positive fiscal position and investment activity for the year.
The audit was independently completed by Deloitte and Touche for the fourth consecutive year in a row. In 2016, FSDEA reported a net result of USD 44 million, achieving profitability for the first time. Generating profits in less than four years after its launch in October 2012 is a result of a prudent investment policy and positive returns on investments, in agriculture and infrastructure sectors.
During the reporting period, the Fund also recorded a 40 percent reduction in operational expenses, compared to 2015.
As of December 31, 2016, the FSDEA’s investment portfolio highlights are as follows:
- The FSDEA’s total assets increased to USD 4.99 billion from USD 4.75 billion in 2015;
- 58% of the total portfolio was dedicated to assets in Sub-Saharan Africa, 10% in North America, 12% in Europe, and 20% across the rest of the world;
- The Fund’s liquid investment portfolio posted a result of USD 22 million;
- Fixed Income net investments were valued at USD 1.1 billion, representing 22% of the total portfolio;
- Net variable income investments were valued at USD 695 million, representing 14% of the total portfolio;
- Private equity investments increased by USD 0.26 billion since 2015;
- The main gains of the seven private equity investment funds were recorded in the Agriculture Fund (USD 0.11 billion) and the Infrastructure Fund (USD 0.18 billion), which offset the capital depreciation of USD 0.03 billion of the remaining five funds;
- USD 433 million of the portfolio’s USD 2.7 billion allocation to private equity has already been invested in assets in Angola and the wider sub-Saharan African region;
- Decrease of 40% in operational expenses as compared to 2015;
- No additional capital was paid to the FSDEA by the Government in 2016.
About the Fund’s performance, José Filomeno dos Santos, Chairman of the Board of Directors, FSDEA, stated, “The Fundo Soberano de Angola has achieved financial profitability in less than three years of activity, despite the difficult international investment environment since 2013. The capital gains of the FSDEA assets confirm unquestionable progress in the implementation of its investment policy drawn up by the Angolan Government. We are proud of the appreciation of private equity investments in the infrastructure and agriculture sectors, where important assets are predominantly in Angola, such as Cabinda’s first deep-water port and large-scale farms. In 2016, these assets contributed significantly to the net results of the Fund. ”
In 2015, the FSDEA was authorized by the Angolan Ministry of Finance to implement a gradual process of adopting the International Financial Reporting Standards (IFRS). The process was fully completed in 2016. The FSDEA accounting records shall be prepared and presented in accordance exclusively with IFRS. The Fund is the first Angolan institution to demonstrate this high level of demand, disclosure and transparency aligned with IFRS. The results released in 2016 are fully compatible with the use of IFRS on a consolidated basis.
FSDEA also dedicates up to 7.5% of its capital to social development programs that are producing socio-economic returns on communities and citizens across many communities and regions of Angola. The FSDEA’s Social Charter supports the work of NGOs in the fields of vocational training, sustainable income generation, access to water and healthcare services. This commitment of the Fund has been instrumental to support the work of institutions such as World Vision, People in Need, Medici Con L’Africa, Globethics, the African Innovation Foundation and many others in remote and urban areas of Angola.
“Over the coming years, we will achieve a continuous asset appreciation within the private equity funds in infrastructure and agriculture sectors and expect the remaining five funds to break even. On the other hand, net investments have made solid gains, despite the conservative position adopted by the FSDEA in relation to the international financial market. In general, the FSDEA presents satisfactory results today, given the difficult national macroeconomic context, marked by the devaluation of the currency and the volatility of the international price of crude oil. We recognize that Angola has been a benchmark African sovereign fund, in a relatively short period of time, which is already well positioned to continue to grow” concluded Dos Santos.
