New Star announces details of Heart of Africa Fund

New Star is delighted to announce the launch of the New Star Heart of Africa Fund. The launch of this sub-Saharan Africa excluding South Africa fund reflects New Star’s belief in the growing investment potential in the region. The New Star Heart of Africa Fund will be managed by AA Citywire rated Jamie Allsopp. Jamie has valuable experience of investing in Africa through his management of the New Star Hidden Value Fund.

We believe this fund is high risk and therefore only suitable for investors who are able to bear the loss of all or part of their capital investment.The New Star Heart of Africa Fund will offer sophisticated investors the rare opportunity to harness the investment potential of sub-Saharan Africa excluding South Africa. Traditionally, sub-Saharan Africa has been viewed by most portfolio investors as a region to avoid. Recent changes, however, have presented investors who are prepared to accept a higher degree of risk with some attractive investment opportunities. Whilst significant risks still remain in the region, positive changes to the investment landscape include:

Increasing levels of political stability;
More sophisticated financial markets and more robust legal structures;
Increasing levels of foreign direct investment and improved infrastructure;
A reducing debt burden;
Strong economic growth in most of the region;
Increasing deregulation and privatisation;
A positive trend in regional creditworthiness;
A low correlation to the performance of other global markets;
The dependence of rapidly growing Asian economies on African resources.

The New Star Heart of Africa Fund will have a minimum investment limit of £12,500 and an initial fixed price offer period running from Monday 22October 2007 to Friday 9 November 2007.

Only a handful of funds offer access to Africa. We are, therefore, expecting considerable demand for the New Star Heart of Africa Fund. Whilst we expect a high level of interest in this product we are mindful of the liquidity constraints of investing in the region. Accordingly, New Star will limit its heart of Africa fund exposure once it reaches £100 million and will restrict new investment for a minimum of two years thereafter.

To enhance the alignment of the fund’s interests with those of its investors, New Star will levy a performance fee of 20% of any outperformance achieved over its target – three-month sterling LIBOR plus 3%.

Mark Skinner, managing director of New Star Investment Funds, says: “Whilst it has clear and large risks, sub-Saharan Africa represents a terrific investment opportunity. To launch one of the first UK retail funds to access this region at such an early stage in its economic development is in keeping with New Star’s philosophy of seeking attractive investment opportunities ahead of the wider market.”

Jamie Allsopp, manager of the New Star Heart of Africa Fund, says: “The investment landscape has changed significantly in Africa. Strong economic growth, high levels of foreign direct investment, increasing political stability and the resultant improvement in corporate governance have created a compelling investment backdrop and it is no surprise that some of the best performing markets in the world are situated in sub-Saharan Africa. My investment process has been built around discovering hidden value and Africa represents a whole continent of undiscovered opportunity.”