On Tuesday, 19th September 2017, Angola’s sovereign wealth fund, Fundo Soberano de Angola (FSDEA), announced its audited results for 2016, which reflects its positive financial position and investment activity for the year.
“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,” José Filomeno dos Santos, Chairman of the Board of Directors, FSDEA, stated.
According to FSDEA, Deloitte and Touche independently completed the audit 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.
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.
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 $4.99 billion from $4.75 billion in 2015;
- 58 percent of the total portfolio was dedicated to assets in Sub-Saharan Africa, 10 percent in North America, 12 percent in Europe, and 20 percent across the rest of the world;
- The Fund’s liquid investment portfolio posted a result of $22 million;
- Fixed Income net investments were valued at $1.1 billion, representing 22 percent of the total portfolio;
- Net variable income investments were valued at $695 million, representing 14 percent of the total portfolio;
- Private equity investments increased by $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 ($0.18 billion), which offset the capital depreciation of USD 0.03 billion of the remaining five funds;
- $433 million of the portfolio’s $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 percent in operational expenses as compared to 2015;
- No additional capital was paid to the FSDEA by the Government in 2016.
FSDEA also dedicates up to 7.5 percent 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.
What you should know about Fundo Soberano de Angola
- The Fundo Soberano de Angola (FSDEA) is a Sovereign Wealth Fund.
- It is wholly owned by the State of the Republic of Angola.
- The Fund was established in accordance with international governance benchmarks.
- It helps to develop an investment portfolio across a number of industries and asset classes, in accordance with the investment policy and guidelines set by the State.
- By pursuing investments that generate long-term and socially enhancing financial returns, the FSDEA has an important role in promoting Angola’s socioeconomic prosperity and generating wealth for Angolans.
Balance Sheet as of 31st December 2016 and 2015
Income Statement as of 31st December 2016 and 2015