Published : 1 year ago, on 01/08/2023

Hemera Capital Partners: Identifying Diverse Opportunities Too Big To Be Ignored

Geneva-based Hemera Capital Partners (HCP) is an independent asset management and investment banking firm with a focus on Southern Africa. HCP’s presence combines with local offices, close to the markets and opportunities of interest, and it plans to open an office in London, UK this year in order to allow greater proximity between international investors and local markets.

As the first local operation and in proximity to its target markets, it commenced operations in Angola in 2019 with the acquisition of a local Asset Manager regulated by Angola’s Capital Market Commission, and grew into a market leader by growing assets under management to AOA 270 billion (~USD 516 million), split across Mutual, Cash Management, Real Estate and Venture Capital funds. Its highly skilled investment banking teams are experienced in M&A, Structured Finance and Capital Markets in Angola as well as in the European, Latin and North American markets.

Mário Amaral is the Managing Director & CEO at Hemera Capital Partners – Asset Management. Before joining HCP, Mário was a Director at QWC LTD, supporting banking institutions in managing their portfolio of non- performing loans. Prior to that, he co-founded and was the Head of Real Estate and Private Equity funds at Odell Global Investors, the first Angolan Asset Management firm incorporated under the country’s new legal framework implemented in 2012. In 2012 he worked for Banco Millennium ATLANTICO, the fourth largest bank in Angola, as Senior Associate in the Investment Banking Department, leading teams in M&A and Structured Finance deals over various sectors, such as Real Estate, Financial Institutions, Agribusiness, Energy and Healthcare. He started his career on the European Valuation Centre team of Willis Towers Watson in Portugal, as an actuarial pension scheme analyst for UK-based companies. Mário holds a master’s degree in Finance from the Brookes Business School in Oxford, UK, with postgraduate studies in Banks and Insurance Companies Management and a degree in Finance, both earned at ISEG in Lisbon, Portugal.

Mário spoke with Wanda Rich, editor of Global Banking & Finance Review, to answer her questions on Southern Africa’s economic potential, the opportunities HCP has identified for investors, and the range of different funds it offers in order to capitalise on them. He also provided insight into its H-IMPACT initiative, which drives impact through the support of clients’ sustainability strategies and ESG activities.

What differentiates Hemera Capital Partners’ approach to fund management from your competitors?

Over the years, our focus was on structuring and developing transactions, mapping the risks and local business environment and, ultimately, building and managing investment mechanisms that allow our target markets to reinforce their connections to the international financial system. We feel the responsibility to lead the market by offering investment alternatives that meet potential investors’ needs and provide them with solutions that go beyond the traditional savings and funds offered by local commercial banks.

We believe that our market has unique opportunities for innovation and growth, in which each player takes the responsibility of performing a key role in developing a mature market aligned to the best international practices to approximate themselves to the markets and attract international investors. Our focus is the innovation, promotion and development of the market through the creation of new vehicles and financial instruments among the different asset classes in order to respond to the investor’s needs, so we launched a fund that was the first of its kind in the Angolan market—and still is the only money-market open-ended mutual fund available for investment on a daily basis in the country— and a Fixed Income Closed Ended Mutual Fund as a currency protection. We also launched the first Closed Ended Real Estate Fund, and the first Venture Capital fund that invests in different stages of startups and SMEs looking to achieve both financial and social return.

What we believe to also differentiate ourselves is the investment that we make to understand the investor’s needs and to identify the opportunities in the market. In that respect we created an internal research department, to design innovative financial instruments that are investor-oriented (both local and international), financially sustainable, ESG compliant and aligned to international best practices.

 What do you see as the economic potential in Southern Africa?

The expectations surrounding African economic growth have enticed investors looking for opportunities with high returns since the early 2000s. With its population estimated to reach 1.5 billion by 2025, progress needs to be made towards addressing key socioeconomic regional issues such as poverty reduction and improved worker productivity, as well as vital business needs such as access to capital, mobility of goods and services between the continent’s markets, and investment in essential infrastructures such as power and rail.

Southern Africa’s GDP of $1.3 trillion contributes ~20% to the continent’s $6.8 trillion GDP, after West Africa’s as the largest contributor at 26.3%. Southern Africa’s three biggest economies—Angola, South Africa and Zambia— contribute about 81.9% of the region’s GDP.

Africa and Southern Africa have been strengthening their bases for sustainable growth, with a combination of increasing institutional maturity, openness to foreign investment, and a focus on innovation. The region has been confirmed as one of the leading areas of world growth for the coming decades by a variety of business indicators. It is an investment opportunity that is almost too big to be ignored by investors who, if they want to succeed, need to position themselves appropriately to be able to take part and enjoy successful investments with high potential returns.

The region is ripe with opportunities from key sectors, so investors now need to take a global, data-driven and locally insightful approach, to enable them to identify the real trends across the region’s industries and uncover the best investment opportunities across industries such as Agriculture & Food, Infrastructure, Technology and Services.

Despite the challenges, Southern Africa is a region that presents diverse opportunities, where knowledgeable and locally and regionally savvy investors can expect sustainable returns.

What are the current opportunities you see for investors?

Over the last few years, a great range of opportunities has emerged for investors. The Angolan government has made a great effort, along with the main financial and investment entities, to create the right environment for attracting investments, to implement a new private investment law to ease the entry of investors, and to expatriate dividends. The Angolan Capital Markets Commission (CMC) has been playing an important role in this process, by the creation of a regulatory framework promoting a secure environment for investment on a wide range of financial instruments. The Angolan Stock Exchange (BODIVA) allows the trading of different types of financial instruments available to investors with rules (self-regulation), systems (platforms) and procedures that assure market fairness and integrity. Both institutions, among others, have contributed and created the necessary means to launch the Angolan Privatisation Programme (PROPRIV). The programme started in 2019 and identifies 195 state-owned enterprises to be privatised during a period of four

years (2019-2022), covering diverse sectors such as oil and mineral resources, telecommunications, finance, transport, hospitality, tourism and agriculture. Some of the companies already have international investors in their structure. The programme has already privatised 96 assets and

has been extended to 2027, to give continuity to the privatisation process of 68 more assets that have been recently included. In 2022, two main banks made an IPO (Initial Public Offering); one is the largest bank in the market, valued at USD 1.5 billion to date, and the other is an international Portuguese bank. The transaction gave the public the possibility of investing in their shares and diversifying their investments. It is expected that companies in the energy sector may go public by issuing shares and corporate bonds in 2023.

Additionally, we believe in local entrepreneurship, and over the last few years we have been dedicated to the mapping and knowledge gathering of the startups ecosystem which culminated in the creation of our Venture Capital fund, where we believe there are great co- investment opportunities for international investors looking to invest in this sector.

Finally, despite the current market size, which has great growth potential, the opportunities of investment range from the Money Market Mutual Fund and Fixed Income Mutual Fund, to the Venture Capital and Real Estate Fund, in which we have a strong real estate team with experience in managing and developing real estate projects. Today, international investors have more flexibility to enter and exit the Angolan capital market, as the Central Bank has introduced new regulation that allows less bureaucracy for foreign investors, providing clear understanding on how to proceed.

Can you tell us about the different funds you offer and their advantages?

Hemera Capital Partners has a combination of different funds that allows a diversification of the investment portfolio, and the achievement of sustainable returns in the medium and long term, taking advantage of the country’s economic potential. We offer services of Asset Management by designing specialised investment mechanisms, aiming to structure, create and manage investment funds and several types of assets, including property, securities and alternative assets. We also create captive funds and tailor- made vehicles with our discretionary services. We have Structuring and Advisory services that rely on the capacity to generate transactions that deliver unique strategic opportunities for our clients, with appropriate terms and conditions and a well-developed risk profile, in line with the best practices in the industry.

HCP, currently, has four funds under management:

• Fundo Liquidez (Money Market Mutual Fund, the first open-ended fund in Angola), which invests in deposits and money market instruments. The fund currently has more than 150 investors and is seven years into operation. The investors range from institutional investors to large corporates and individuals. It seeks to provide its investors with an investment with low volatility, and a level of potential return that is stable and above the alternatives offered by traditional savings and deposit products. It mainly invests in money market securities and term deposits with a residual maturity of less than 12 months
• Fundo Atlântico Protecção (Fixed Income Closed Ended Mutual Fund

– Exchange Coverage, the first in the market), which invests predominantly in Angolan indexed sovereign bonds (AOA to USD). This was created in partnership with Banco Millennium Atlântico (ATL), one of the largest banks in Angola.

• Pactual Property Fund (Closed Ended Real Estate Fund, also first in the market), which invests predominantly in mature assets with medium/long-term rental agreements with tenants who have a high credit rating. The fund has more than 170 assets under management. There is a short/medium-term strategy to list part of the fund in the Angolan Stock Exchange. https://www.pactualpropertyfund.com/en/properties
• Dual Impact Fund (Venture Capital linked to the 2030 Agenda for Sustainable Development Goals [SDGs]), which invests in different stages of startups and SMEs with financial and social returns. It provides long-term finance to support the growth of the target company and achieve the SDG. https://dualimpactfund.com

Can you tell us about Hemera Capital Partners’ impact initiative?

The subject of impact has been a part of HCP’s DNA since the company was established. Our commitment is to achieve long-term sustainability in the creation of value, and to rethink the dynamic of business under the principles of shared value, which led us to create H-IMPACT, our initiative to drive impact and sustainability, providing support with the client’s sustainability strategy, policies and processes, as well as the design and implementation of ESG metrics and initiatives.

In 2022 we structured the aforementioned Dual Impact Fund, the first impact fund in Angola which, through its investment policy, aims to target investment opportunities which can both generate financial returns as well as have an impact by addressing social and environmental issues. The fund is sector-agnostic but is looking to invest in preferred sectors such as Health, Education, E-Commerce, Financial Business, Mobility, etc.

In 2021, Hemera Capital Partners promoted an event, the Angola Sustainability eSummit, organised by H-IMPACT, that took place on the 25th of May. It was the first e-summit on sustainability in Angola and addressed the key roles that sustainability and sustainable finance can play in the country’s socio-economic growth, as well as in attracting international investment. We had an impressive array of speakers, such as the UN Resident Coordinator in Angola, Ms. Zahira Virani, in representation of His Excellency António Guterres, the Secretary General of the UN, Ms. Tanya dos Santos, Global Head of Sustainability for Investec, Ms. Portia Bangerezako, Head of Sustainability for Sanlam, Mr. Ottoniel dos Santos, the Secretary of State for Finance and Treasury, Ms. Maria Uini Baptista, the Chairwoman of the Board of Directors of the CMC, Mr. Walter Pacheco, the President of BODIVA, and Mr. Hector Gomez Ang, the Representative of IFC in Angola, among many others.

Key materials:

1. The Angola Sustainability eSummit that took place on 25 May, 2021: https://www.youtube. com/channel/UCAUg-G_ lf5LizT5yM0HGIgA
2. In 2022, HCP became a signatory of the PRI (Principles for Responsible Investment): https://www.unpri.org/
3. In 2022, HCP became a member of UN Global Compact: https://www. unglobalcompact.org/
4. In 2020, HCP issued a Sustainability Report, available on the HCP website: https://www.hemeracapitalpartners. com/ content/download/reports/15062021_ SGHCP_RC_2020_vF_ Web.pdf

How has Hemera Capital Partners adapted to the current pandemic?

The year 2020 was marked by the global pandemic caused by COVID-19, which made a significant social and economic impact on the world, especially in the way we work, do business and interact with one another in general.

HCP quickly adapted to the new reality imposed by the pandemic, with the creation and implementation of a contingency plan to guide all the biosafety measures to be taken by employees, which follow the best international practices and are defined by the local official health agencies. HCP ensured the progressive return of employees to the workplace and had to rethink the business strategy.

At the beginning of the pandemic, HCP put a continuity plan in place by adjusting its business strategy to the new reality. In that period, it created a set of partnerships with institutional investors that allowed us to more than increase our assets under management (AuM). We established partnerships with some local and international entities, such as banks for trading the shares of the funds under our management, private and institutional entities to collect industry data of the market to identify and map investment opportunities, and players from the local financial industry to understand the impact caused by COVID-19 and the challenges faced by investors and companies in the market.

 Are you launching any new funds this year?

Yes. These will essentially be mutual funds which we believe will be innovative financial instruments to private investors and companies. We are currently looking to structure equity funds and pension funds for retail investors.

What are the future plans for sustainable development?

We see great potential in our market on this subject, and are currently structuring and developing our business model in a sustainable fashion. We are finalising the ESG integration into our strategy and the business model. We intend in the short term to strengthen the sustainability in our strategy that, across our company, prioritises the following seven themes:

1. Risk management and compliance
2. Integration of ESG into HCP activities
3. Ethics in business
4. Attracting and retaining talent
5. Diversity, inclusion and non- discrimination
6. Investment performance
7. Cybersecurity

We believe that strategic focus on these areas will allow us to continue to develop our business in a sustainable and financially viable way, as well as to better prepare ourselves to contribute and accompany the development of the financial markets and maintain ourselves as a major player.