Announced in 2008, established in 2012, and receiving the final installment of its initial endowment in June of this year, Fundo Soberano de Angola (Angola’s sovereign wealth fund) finally has progressed to investing its $5 billion in assets. In a series of recent interviews, fund Chairman José Filomeno Dos Santos has been detailing how the fund’s portfolio will be diversified and answering questions about its governance structure.
The guiding principle of the fund will be to “[pursue] investments that generate long-term and sustainable financial returns” and, in turn, use that wealth “to promote growth, prosperity and social and economic development across Angola” and sub-Saharan Africa more broadly. To accomplish these goals, up to one third of the $5 billion fund will be put into alternative investments across sub-Saharan Africa. Through private equity-style special purpose vehicles set up as limited liability partnerships (in which the fund is one of the investors), the fund will identify and pursue opportunities in priority sectors such as agriculture, commercial real estate, energy, hotels, and infrastructure. The other two-thirds of the fund will be allocated equally between “highly liquid securities such as cash, bonds and listed equities” and “opportunistic investments internationally: distressed assets that the fund could take advantage of, spin around and refocus.”
Although Chairman Dos Santos has international financial management experience, he also is the son of the sitting President which is a fact that has raised questions about the governance and transparency of the fund. Chairman Dos Santos has asserted that the fund’s organizational structures has several layers of review and supervision. In addition to a Board of Directors, a Fiscal Council, and an Advisory Council, the fund will have Deloitte serving as its independent auditor. It also has signed on to the IMF-backed Santiago Principles which provide a set of voluntary principles and practices for sovereign wealth funds.
Notwithstanding these protections, additional concerns have been raised about the fund’s autonomy because its Board is appointed by the country’s President and its investment strategy is approved by the government. Chairman Dos Santos’s response is that the fund “is a state entity, not a corporation that is owned by the state” and so its investment strategy operates within the bounds of the government’s own investment policies. This relationship between the State and the fund leaves open the possibility that a future government could redefine the country’s investment policies and, in turn, the parameters of the fund’s investment strategy.
To date, the fund has appointed only one external manager, the Swiss-based Quantum Global Group. Chairman Dos Santos says that the fund would like to bring on additional external managers but has had “quite a difficult time” finding ones with “the right experience in Africa.”