(Ep.107) The Acquirers Podcast: Adrian Saville – African Value: Value Investing Across African And Other Frontier Markets

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In this episode of The Acquirers Podcast Tobias chats with Adrian Saville, Chief Executive at Cannon Asset Management. During the interview Adrian provided some great insights into:

  • Deep Value + Quality
  • Sticking With Your Process
  • The African Century
  • Neutralizing Big Macro Risks
  • $NPSNY, $TCEHY & Holdcos
  • Dealing With Accounting & Regulatory Regimes In Frontier Markets
  • Martian Investing Around The World
  • $TLKGYs Masts, Towers & Property Subsidiary Gyro
  • The SuperDogs Portfolio
  • Finding Opportunities That Are Off Most Investors Radar

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Full Transcript

Tobias: Hi, I’m Tobias Carlisle. This is The Acquirer’s Podcast. My special guest today is Adrian Saville. He’s back for a third time. It’s the second one we managed to record, we failed the first time around. I think I got the original this time. It’s an absolutely fascinating discussion about South African investing, global investing, and pan African investing coming up after this.


Tobias: Adrian, you’re one of my very early guests, one of my very early victims, and I lost the recording of the very first time we did, so we had to do the tribute recording. So, I’ve made sure that everything’s on and recording this time. Perhaps for folks who didn’t catch the first one, because we’ve grown a little bit since that one, let’s recap who you are. You’re both a professor and a practitioner of investing in South Africa. Your firm is Cannon Asset Managers. What’s the focus of Cannon?

Adrian: Toby, it’s great to be with you again. Hopefully this time it’s a– first time out the blocks. Cannon is business that I started more than 20 years ago in the late 1990s. I suppose my throwaway or my claim to fame in the birthing of the business in the late 1990s was, we were ensconced in the Asian and Russian crises, emerging markets were deeply out of favor, and in a flash of brilliance, I decided to start an emerging market equity firm. Since then, the business has grown to today look after individual and institutional assets and also grown, not just in terms of the stature and nature of clients, but also their geographies. For the last 12, 13 years, I’ve been running a global equity fund, which borrowing on Cannon’s routes of being a high active manager, being comfortable building very, very high conviction portfolios, that global equity fund runs with just 30 stocks in it. Benchmarked against MSCI all country world index, which has got a couple of thousand stocks.

Finding Opportunities That Are Off Most Investors Radar

Adrian: I think that speaks to the real heart and pulse of our investment philosophy and process, is the capacity to discover or establish, identify inefficiencies. Those inefficiencies might be by through owning factors. Factors can be wide ranging from deep value, momentum, quality, but owning factors is a broad-brush way of building those different-than-market portfolios. I think where we’ve really established a skill is in identifying individual names that are off most investors’ radar, and that’s achieved by going outside of the top 40 in South Africa. Top 40 index makes up about 80% of market cap, the top 100 makes up about 90% of market cap. Covering 100 stocks gives you 90% market coverage. Yet, there are a few hundred more highly liquid, well-traded businesses with long track records. If you roll up your sleeves and you go digging into that market arena, there is some of the most extraordinary value and opportunities. I think that captures Cannon perhaps in a couple of sentences’ introduction.

Tobias: When you’re implementing your strategy, which countries do you predominantly end up invested in? Or is that a moveable feast or, do you find that there’s a concentration in particular areas?

Neutralizing Big Macro Risks

Adrian: Globally, when we’re building our global portfolio, what we try and remove, and this is very, very deliberate, is we try and remove macro risk. That macro, risk we measure at the level of currency, country, and industry. Whilst I’m boasting that we build a 30-stock fund that looks very, very different to the MSCI index, it actually holds weights that resemble the MSCI currency weight, industry weight, and geography weight. If you get the idea right, but the country wrong, you’re stranded. If you get the idea right and the currency wrong, you’re stranded. We try and sterilize or neutralize those big macro risks and then we will fill our 10% Japanese allocation or our 15% European allocation with core ideas, focused ideas, that will then give us a footprint that mimics the index. That means we tend to look very similar to global footprint at the industry, country, currency level, but the names that make up the portfolio, I think, really make for some interesting reading.

By way of example, we built real estate exposure in– owning a mega healthcare in the United States, which is a 7%, 8% dividend yield. It doesn’t run, but rather owns old age homes. A beautifully diversified portfolio, 70% exposure to the US, 30% of the UK and Europe. You’ll appreciate by nature of the business model, it has very, very high occupancy rates. It has a strong, stable, and effluent client base. Those are the types of ideas that we look to populate the portfolio, and in turn, it translates into very long holding periods. The average holding period in that global portfolio at the moment is about seven years, which I think also distinguishes us from many of the more obvious investment destinations and our boast here is that we really are investors with an average holding period of seven years, rather than seven months.

Deep Value + Quality

Tobias: How do you characterize your style?

Adrian: Well, if you’d asked me this question 10 years ago, [chuckles] or 12 years ago, 2008 or so, I would have told you unashamedly and with very, very high conviction, deep value. That we were quite comfortable going in search of Ben Graham net nets, we would look for big balance sheets, strong cash flow, and quite comfortable in a really rolling up our sleeves. What John Maynard Keynes tells us is that, “The market can stay irrational longer than you can stay solvent.” [chuckles] If we tried to stay with that approach in a sort of a pigheaded way for 12 years, I think the business would have failed, because investors just have really fallen out of love with that type of style and approach. So, out of necessity, we’ve been obliged to shift some of the portfolio construction and going in search of less deep value. I would still describe our style as strong value orientation, very, very patient, high information searches. But we’ve had to put factors including quality into the portfolio. I think that was an expensive lesson to learn in 2009, 2010. We’re not talking more than a decade of having shifted our investment approach.

I’m making a long answer of a short, but I think, really important question, and I would describe an aspect of our investment approach as being constant learning, that not for one moment, do we imagine we’ve worked it out. We’re constantly trying to figure out different approaches. If our style or tools aren’t working, why aren’t they working? If they are working, are we confident that they will sustain that performance?

The SuperDogs Portfolio

Tobias: When we first spoke a few years ago, you had spoken a little bit about the SuperDogs portfolio? Can you just describe the SuperDogs and update us perhaps on how SuperDogs has performed?

Adrian: Sure. You introduced me as having a professorship, and I think that’s where SuperDogs starts, is in my academic origins. All the way back in the late 1990s around the time that we were starting the business, I wondered aloud what would happen if I went and bought the most unloved businesses on the Johannesburg Stock Exchange. The way in identifying unlovedness– and that idea was brought to me by a colleague at the time, Paul [unintelligible [00:10:50], who was doing a lot of work in factor investing. Paul showed me some really interesting work, including [unintelligible [00:11:04] stuff in the new finance, which was identifying some clear factors, including price book, dividend yield, price earnings.

My thinking aloud was, “Well, I wonder what would happen if I applied those same screens or filters and build a South African portfolio?” I was fortunate in that rather than just screening for factors. I forced that the factors had to be multi-industry, which meant you weren’t just going and finding the lowest price book, highest dividend yield, lowest price earnings, rather you were finding it in the retail sector, in the engineering sector, in the telco sector, etc. So, I forced that sectoral diversification. That was one of the very first really big learnings that I got out of building that portfolio, was the free lunch offered by diversification.

Their portfolio has been running since mid-1990s to now, and over that period, has done 39 times capital versus the markets 15 times capital. It’s just an absolutely extraordinary investment result. I’m not going to put it down to any our personal brilliance, I’d love to claim all types of ownership. We have applied year after year, the exact same filters, having said that, those filters have become slightly more refined, and particular, it was global financial crisis that encouraged us to put quality on as a filter alongside the deep value. From mid-1990s to 2008 and 2009, we did just price earnings, price book dividend yield, that was it. The company had to be sufficiently liquid, of a sufficient size that we could invest, and it had to be profitable. Those were the criteria.

2008, we put on a second suite of screens that included Piotroski F-scores, Altman Z’s, 50 years on Altman Z still works. Borrowing from the stuff that James Montier has built like his C-score. Suites of quality criteria and adding those to the value criteria, we’ve run that double filter since 2008 to present, and notwithstanding the fact that value as a style has really struggled in South Africa and globally, SuperDogs has done okay, it’s managed to hang on to what I think is a really impressive performance.

Sticking With Your Process

Tobias: What do you attribute that, to the fact that it’s got that diversification and the quality filter? Do you think that’s what’s helped?

Adrian: You know, Toby, I think it’s a couple of elements. The one is just sticking with the process, because you can get 0% return, minus 10, minus 20. You want to give up and then you’re presented with a whiz bang year, a real hallelujah year of plus 60, plus 80. We’ve had a couple of those. We’ve had a couple of plus 60, plus 80 years, but to get those, you just have to hold the line. I think that that’s the one attribute. What also– [chuckles] I’m chuckling because I’m thinking of a note– around about the time we last spoke, I had just written a note talking about the incredible value that was buried inside of this portfolio, convinced– you especially have this feeling when you’ve just written the note, convinced that it’s about to be unleashed and of course, nothing happened. The best performance tends to come when you don’t expect it.

A great case in point is the last six months where the portfolio has had a superb time. As the COVID conditions sort of eased, the South African economy went into better shape, the rand became one of the best performing emerging market currencies, and our unloved mid, small, nano cap stocks just set up phenomenally. I think that that’s the one attribute. The second is, we’re paid to wait, and that’s through dividend yield and/or share buybacks. You can be paid to wait, which is just a comforting ongoing compounder, where if you give it enough time, and you look at the dividend yield of the portfolio, the average portfolio dividend yield is about two and a half percent above the market per annum. That two and a half percent per annum can become quite a powerful compounder in the fullness of time.

Then, I think the third factor that really turns it into an extraordinarily powerful investment proposition is that it’s got this mid cap, and even more importantly, small cap, micro-cap, nano-cap. Those nano-cap stocks. Again, going back to the last time we spoke, if I remember correctly, we spoke about a company called Indequity, which was an insurance company, trading at then at about 3 rand a share, it had more than that in cash on the balance sheet. From then to now, the share price has moved from 3 rand to 8 rand, we’ve had dividends every year, and they’ve just been taken off the market. That position is not available to a big institutional investor. It’s just too small. I think that those things come together as a nice cocktail.

Tobias: Let’s go back to the global portfolio. When you think about constructing a portfolio that has 30 stocks and your holding period is seven years, how do you deal with rebalancing and maintaining those sector and industry, geographical exposures that you need? How is the rebalancing process achieved there?

Adrian: Well, first, the investment process has the discipline of regular review. We will regularly review the portfolio by discipline, by construction on a monthly basis. What we don’t do is in a keep pulling it back to benchmark weight. I think this is where investing quickly turns from being a science into an art where you have to let the winners run. I think that that’s quite tricky, because the winners can run so hard that they start to actually distort the portfolio, imbalance the portfolio. A great case in point would be a position that we’ve held in South Korean assets recently, where South Korea has had a fantastic last 12 months or so, and hanging on to that is a great momentum factor. But give it enough rope and it starts to become an uncomfortably overweight position. This is, I think, where you have to rely on not just hard metrics and science, but some gut feel and experience, and know that you want the winners to run long enough that you can own the momentum, but not so long that you start to put specific risk into the portfolio. I think that that’s art rather than science, which is probably an unhelpful answer.

Tobias: No, that’s a great answer. That’s a very helpful answer. You’ve spoken on a number of occasions to our mutual friend, John Mihaljevic and his Manual of Ideas. Would you like to just discuss a few of those ideas on this podcast?

Adrian: Sure. Without sort of creeping on to John’s turf or terrain, I’ve had the pleasure of being invited to speak on the Best Ideas platform for a couple of years. We’ve shared some ideas that I think have– Well, not I think, that has translated into really good results. Again, emphasizing the information that you can discover or uncover by going a little bit off the radar on the Johannesburg Stock Exchange. For people listening to the podcast, who aren’t familiar with the Johannesburg Stock Exchange, first, it’s a really well-established market. The JSE has been around for 140 years as a formal market, 140 years ago being the foundation of gold mining, diamond mining, and then later platinum and coal mining businesses. Really, they’re the origins of South African resource and mining houses.

Over the 140 years, it has established a reputation or a position as being a well-regulated, well-traded exchange, where you’ve got excellent compliance, superb protection of minority shareholders. You’ve got strong rule of law in South Africa. You can establish your rights, contest your rights, hold management accountable, and so on. Notwithstanding the fact that we are a small commodity-based economy, we have a very sophisticated well-established stock exchange. I think that that provides for a very robust investment environment.

$TKG’s Masts, Towers & Property Subsidiary Gyro

Adrian: Well, maybe we can go backwards over the last couple of years. A great case in point of one of the ideas two, three years back was Telkom, which is one of South Africa’s large listed telcos. What jumped out to us about Telkom was that it had a market cap at the time of about 30 billion rand, very profitable, high dividend yield. I’m going to speculate on what the dividend yield was at the time, I’m remembering back three years. I think the dividend yield was sitting somewhere around 7%, with a price earnings multiple of seven times, and a 50-billion-rand market cap. The huge was, however, that 50 billion market cap was represented by a 20 billion rand property portfolio, which was invested in masts and towers. Their own masts and towers that they’re routing their traffic through, that makes up 20 billion of the market cap, and we’re going to be paid a 7% dividend yield.

Our suspicion was that that property business, it’s called Gyro. Our suspicion was that that would be unbundled and we would have a huge release of trapped value and then own the telco, alongside the property portfolio. The market got ahead of itself, and it took the share price from where we had been buying it at around 25 and 50 rand, it took the share price all the way up to 90 rand. At that point, full value had been reflected or recognized, and we exited. What was absolutely extraordinary was no sooner had we sold all of our positions in Telkom, then the share price quickly fell back to 60 and 50 rand. Now, this makes you feel, “Oh, hang on, should I be trading this stock?” [chuckles] We went back and we reinvested. To my dismay, it didn’t bottom at 50 and 60. It kept falling into the 40s and 50s, where we actually went and bought even more. From then, the share prices subsequently set back up. That’s an example– [crosstalk]

Tobias: Do you have any view on why it fell like that?

Adrian: Head scratchings. No idea. Absolutely no idea. What we wondered, when we reentered the position at 50 and 60, we thought like, “Wow, we’re really clever. We’ve got this right.” Then are forced to 40, 50, we’re like, “Well, hang on. What don’t we know here?” [laughs] Yeah.

Tobias: Was it a big party exiting? Did people see your trades and leave when [crosstalk] that?

Adrian: No. We’re a tiny participant in the market. There’s no way we had this ability to influence the market. Absolutely no way. Something else was going on. Whether it was a large fund changing their view on South Africa, there was concern about some regulatory changes, some of the activities of Telkom had come under question that could be in line for a regulatory fine. Even then, not that I’m excusing or forgiving a regulatory fine, and even then, if we put in the most robust assumptions about what that fine might be, it was no way that you could get to a 50 or 40 rand share price. So, yeah. We set with our position, and it’s found its way back, not to 90 rand, but back to towards some more sensible territory and I think that Gyro property won’t be released. It still hasn’t been released, and the reason why I would put that down to COVID-19 environment where people just went into holding pattern.

$NPSNY, $TCEHY & Holdcos

Tobias: One of the unusual features of the South African market is that it is largely resource-based market. I’m familiar with markets like that, because I come from Australia, and Australia’s got a similar kind of market. You have this unusual feature in South Africa that you’ve got a very large tech stock in Tencent. What’s the update on Tencent?

Adrian: Well, if you’re an active manager, it’s an absolute curse because Tencent initially was held through a company called Naspers. Naspers acquired substantial stake in Tencent many years ago, and that has become a huge component of the broad Johannesburg Stock Exchange making up more than 25% of the index. When I give that example, I’m reminded of Nokia. In a way, Nokia became the single stock expanding 80% of the index. If you get it right, you look like a superstar, if you get it wrong, you look like an idiot. That makes a very strong case for actually indexing, just owning the index basket. To get to your question more exactly, Naspers has been under a lot of pressure to try and release the trapped value because Naspers trades at about 50% or 50 cents on the dollar of its Tencent valuation. There’s no good reason for this, why would have traded that type of discount?

The Naspers has done two things in recent times. The first was they separated out, part of the portfolio into a business called Prosus, which is also a holding company, but that allows them to separate or distinguish some of the e-commerce businesses in Naspers and Prosus. However, now both Naspers and Prosus are trading at 50 cents on the dollar, so go figure. What both of the businesses have done in the last year or so is they’ve gone into quite active share buyback programs and there’s a very vocal shareholder community that is trying to get this trapped value released, but it’s billions of dollars that are in there.

Tobias: I know that you wanted to discuss a holdco example. Is that the holdco example you’re thinking of?

Adrian: Well, no. It’s one of them. You’ve said South Africa has this large ticket basement. Perhaps, I should add to that, or alongside your observation comment that, although that that’s one of the very large tech investments, outside of that South Africa is relatively tech poor from a market perspective. However, we also have a very sophisticated and established financial services cluster. Over the years, that financial services cluster has translated into many holdcos being listed. African Rainbow Capital is an example, Brait, Brimstone, Ethos, Long4Life, Naspers and Prosus that we’ve just mentioned, PSG, Zeder, which is an agricultural sector holdco. I’ve gone over those alphabetically. [chuckles]

When I run through that list, and I look at the net asset value and their share prices, as a collective, they trade at about a 40% or 50% discount to net asset value. Some of them are huge market caps, with these very, very big discounts to nav. In the case of Naspers and Prosus, we’re talking about $100 billion market cap. So, you’ve got $100 billion market cap trading at, in the case of Naspers, a 55% discount to net asset value, and Prosus a 35% discount to net asset value. Not only do you have massive market cap, you’ve got huge discount. What’s really interesting, and this is where the clever financial engineering can come in is, the Naspers and Prosus portfolios actually look quite similar, so you could get your free lunch by going long Naspers and short Prosus with the 55% and 35% discount being your– that’s your straddle.

The other holdcos that I wanted to reference in passing and this was the one that I spoke to John about earlier in the year is a company called Sabvest Capital. Sabvest Capital has been listed on the Johannesburg Stock Exchange since the late 1980s. Over this 50-year listed investment history, it has produced a compound cumulative return on assets of 21% per annum, so you’ve got a business that’s compounding return on invested capital ROIC of 21% per annum. Its weighted cost of capital in a South African environment would be, given its market cap, given our risk-free rates, you would put a weighted average cost of capital of low double digit and for the sake of a number, a 12% weighted average cost of capital with a return on invested capital of 21%. This business is compounding away quite comfortably, also getting into the business of share buybacks. It’s got a beautifully diversified portfolio. About half of the assets is outside of South Africa. Then, it’s multi-industry. It owns a documented data storage business, it owns a textile, zipper and fastener business. It owns a taxi fleet financing business. It’s got some small industrial food and related industry investments. Here you’ve got this wonderfully diversified portfolio, by industry, by geography, by currency, compounding a 21% per annum, buying back and canceling its own shares, and it’s trading at 50 cents on the rand. Actually, it’s trading at 40 cents on the rand.

What the cynics will tell you is, when is that 60% discount going to close? Maybe the cheeky answer is, well, hopefully it never closes because, here, I can effectively get a good investment. I’m paying 40 cents for a rand of equity, and it’s the rand of equity that’s compounding at 21% per annum on my 40-cent exposure. This is, I think, an example of one of the really interesting ideas in the South African environment for international investors, global investors that might be just a little too small, it’s $100 million market cap. For us, it’s more than sufficient size for us to build quite a large position in our specialist equity portfolio. We own about 10% of our specialist equity portfolio allocated to Sabvest.

Martian Investing Around The World

Tobias: You have these very diverse ideas from very broad parts of the of the world. How do you find the ideas? How are you sourcing ideas?

Adrian: Well, first, just by reading widely, by having interest in lots of different markets from Southeast Asia to South America. A way of feeding that is my wife and I have an affinity for travel. Travel takes you to different markets, different cultures. In those geographies, I think it exposes you to opportunity sets. Then through relationships like yours and mine, network, which obliges you to explore globally. My cheeky observation would be that perhaps I’m speaking to you from Johannesburg, South Africa, but the fact that we’re speaking, I think it’s something AM your time. [chuckles]

Tobias: Right.

Adrian: It’s fairly late PM my time. We’re having a great conversation, the time of day doesn’t matter, geography doesn’t matter, that really does make the world investable. My cheeky observational view, “Why couldn’t I live on Mars then? Could we have a discussion as if we were Martian investors, looking at the world as the place that we’re going to allocate capital?”

Tobias: One of the challenges that you could front investing on Mars is that they’ve got no doubt a very different regulatory regime to the one that we have here. Perhaps, they had a different method of reporting. How would you get– [crosstalk]

Adrian: [laughs] We’ll go and ask our fellow South African, Elon Musk. [laughs]

Accounting & Regulatory Regimes In Frontier Markets

Tobias: Soon. He’s just looking for another place to list. How do you get comfortable with the many diverse regulatory regimes, you’ve got different accounting regimes, you’ve got [unintelligible [00:38:08] from many parts of the world, gap, and all of those [unintelligible [00:38:12] implementations are local implementations, so there’s a big difference between the Australian implementation of it and various others? How do you get comfortable with those, with that different regulatory environments?

Adrian: Yeah, look, I think that that’s a great question. More than just being a great question, I think it’s a really critical question because if you get the idea right but the risk wrong, you’re going to be caught in there. You see that especially in frontier markets where in recent times, I can think of investors getting caught in Angolan investments, Nigerian investments where they could get the capital in, but they couldn’t get the capital out. In fact, that’s our stock position in considering any investment. We don’t worry about the valuation or what do we think that this thing is worth? We first worry about, “Can we get out? Will we be protected as minority shareholders? Is there liquidity? Can we buy the investment? If we sell the investment, can we accept the capital and repatriate it to our Bank of New York Mellon account?” All of those are absolutely critical issues. If we are going to get into a legal tussle, will we have the protection of courts, will we have minority shareholder protection?

That then takes you, I suppose fairly obviously, if you’re looking in Latin America, it takes you far more comfortably, or takes us far more comfortably to a Chilean investment, or exposure in Latin America. In Southeast Asia, we’re going to be far more comfortable and confident in a Taiwanese investment or a South Korean investment. By way of example, for a number of years, we’ve held our “exposure” to China, by way of a Taiwanese investment, called Taiwan Semiconductor Manufacturing Corporation.

Tobias: Congrats. [chuckles]

Adrian: That’s sort of a proxy. Those are the ways that we’ll square up to those types of challenges.

The African Century

Tobias: It’s long been said that there’s an African century coming. Do you feel that it is in fact here? I don’t know what has changed, but it does seem to me that there’s been– it’s become increasingly to the forefront that perhaps the change in telecommunications, technology has sort of done something to– Africa seems to be a place that I hear a lot of people talking about as an investment destination. Well, on the ground, how do you feel about that?

Adrian: In my professorial portfolio, I’ve got the privilege of looking after an entity called the Centre for African Management and Markets, which is based at my business school, the Gordon Institute of Business Science. Our ambition, our endeavor through that center is to turn good ideas into actionable investments, and actionable businesses. We refer to this as bold connect to sort of thought leadership and business models turning into being actualized. What would make that so compelling is, I agree with you, there’s a range of things that are going on that are coming together. Financial inclusion is an aspect. Telcos and digitization is another aspect. Your observation reminds me of a business that was built in Kenya called M-AKIBA. M-AKIBA allows you to buy on your smartphone a government bond, and that government bond invests in Kenyan infrastructure with a 10% yield. It’s revolutionary, by way of business modeling, financial inclusion, the convergence of data, mobility, access.

Then, you could add alongside there’s some very big structural drivers, including young populations, increasing access to education, improving productivity levels, improving infrastructure. And then, probably the two or three big needle movers in recent times have been growing confidence in political and regulatory arrangements. If you rewind 20 years ago, and you look for democracies in Africa, you’re hard pressed. If you look for democracies today, you are impressed by the maturity. The most recent example is Ghana, which has just had a change in regime, peaceful change in a political regime. Nigeria has had peaceful change in political regime, and so on and so on. So, Africa is overwhelmingly today democratic rather than despotic, which it was 20, 25 years ago. I think that’s one big needle changer.

The second needle mover. the second is movement across borders and inside of countries, and the African Continental Free Trade Agreement is the big story of 2021. Then, the third is a global recognition, which has pushed global capital into these emerging and frontier markets. China is the big mover on this front. The capital appetite and the investor interest, China might be at the front of the train or the front of the charge, but it really is a multinational interest that is adding to substantial domestic investment rates. You can go to countries as different as Cote d’Ivoire, Ghana, Ethiopia, where you will find gross domestic fixed investment rates of 25% and 30% of GDP.

Tobias: That’s fascinating. Aside from your own country, do you have any–? Which of them do you feel are most mature or furthest along the path to becoming good investment destinations?

Adrian: I’ve probably given away my favorite ideas, or my favorite places. In West Africa, the countries the economies that stand out most impressively, Cote d’Ivoire, or the Ivory Coast as its Anglophone would have it, Ghana, its neighbor. Those two, although they are much, much smaller than Nigeria, in population and geography have, I think, more substance in terms of industrial positioning and investability.

On the East Coast, you could almost invest– a bit of a sweeping statement that you could almost invest anywhere in the East Coast. It really is an impressive crescent shape of economies from Ethiopia, Tanzania, Kenya, Rwanda, very, very impressive, all the way down to Mozambique, which is packing in 5% and 6% economic growth rates per annum. Then in Southern Africa, South Africa has got a lot of work to do, to step up to the economic and social prosperity plate. But I would venture that the more impressive investment destination in Southern Africa is Botswana, which is best known for its diamond fields.

Tobias: Is it minerals and resources throughout Africa?

Adrian: Well, no. If you go to West Africa, I would give you examples of names. An example in West Africa would be a business called Sonatel, which is the Senegalese-listed telco. This goes back to your question about how do you get comfortable investing in Senegal. which is French speaking, Francophone Africa? Well, Sonatel, although it is based in Senegal, it is listed in Europe, and it is controlled by Orange or perhaps it’s Or-aange. [chuckles] The French telco. We’ve got a European listing, we’ve got a French parent company, and that gives us comfort it being invested there. If we go to Southern Africa, Zambeef is a great example. Zambeef stands for Zambia beef. Zambeef is listed in Zambia. It is also listed on the London Stock Exchange. There again, you’ve got confidence that you’re getting reporting, regulation, auditing, compliance, governance, and so on. If my argument to you right at the beginning of this podcast is you can find some interesting stuff in South Africa, if you’re comfortable pushing the net a little bit wider and doing a pan-African survey, there are just the most extraordinary opportunities, multi-industry, multi-country, and well beyond resources into beverages, telcos, financial services, and more.

Tobias: That’s absolutely fascinating, Adrian. We’re coming up on time. If folks want to get in contact with you, or follow along with what you’re doing, how do they go about doing that?

Adrian: Toby, easiest way to find me is just through my Twitter handle, which is my name, @AdrianSaville. I guess that that’s the easiest way to find me.

Tobias: I’ll link that up in the show notes. Adrian Saville, Cannon Asset Management, thank you very much.

Adrian: Great being with you.


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