Africa’s economic transformation is gaining momentum, offering investors a unique blend of growth, diversification, and undervalued opportunities. With global markets facing uncertainty, Africa’s fundamentals stand out as compelling.

The continent’s population is projected to reach 2.4 billion by 2050, boasting the world’s fastest-growing working-age population, according to United Nations estimates. This demographic surge is driving demand for consumer goods, financial services, education, and healthcare.

Africa’s vast natural resources, including critical minerals, precious metals, and energy, form a backbone for industrialisation and global supply chains.

Urbanisation is accelerating. According to the World Bank, the number of megacities will double by 2040, fuelling demand for housing, logistics, construction and retail.

The African Development Bank forecasts that the continent’s middle class could grow to 1.1 billion by mid-century, generating significant consumer spending.

These secular trends create a robust environment for businesses to increase their revenue, profits, and shareholder value.

Valuations in African equity markets are strikingly attractive. African equities trade at 12 times trailing earnings and nine times forward earnings, compared to 25 and 19 times for the S&P 500. Price-to-book ratios are 1.4 times versus 4.2 times, and dividend yields average 4.9 per cent compared to 1.6 per cent for the US market. This gap between fundamentals and valuations offers a significant opportunity for selective long-term investors.

Recognising this potential, the Valletta-headquartered Mediterrania Capital Partners, a private equity firm with over 12 years’ experience of investing in growth opportunities and delivering superior returns in African markets, launched the Africa Select Equity Fund SICAV Plc (ASEF) in July 2024.

ASEF is designed to capitalise on Africa’s structural growth by investing in high-quality companies with strong fundamentals for attractive, sustainable long-term returns.

ASEF adopts a disciplined, bottom-up investment process, targeting a concentrated portfolio of approximately 20 companies vetted for their quality, growth and value. Unlike traditional emerging market strategies that rely on top-down forecasts, ASEF focuses on individual company fundamentals, ensuring a wide margin of safety. To ensure diversification, the fund spreads its investments across different sectors and regions, with each holding chosen for its intrinsic value, independent of short-term market sentiment.

ASEF’s direct local presence and engagement with management teams are central to its approach. Understanding governance, incentives, and local dynamics is critical in African markets. Volatility is viewed as an opportunity, with investments made to prioritise downside protection and long-term compounding. To maintain this agile approach, the fund limits its capacity in less liquid markets, ensuring access to top opportunities without sacrificing efficiency.

From 1st July 2024 to 30th June 2025, the ASEF portfolio achieved a gross return of 30 per cent, despite a challenging global environment. The portfolio’s sector exposure reflects conviction-led stock selection, not macro narratives or index-driven allocation.

ASEF offers bimonthly dealings, providing investors with liquidity to navigate Africa’s dynamic markets. The fund is a UCITS, licensed in Malta, and regulated by the Malta Financial Services Authority (MFSA). The Fund’s Prospectus is available for download at www.africaselectfund.com.

Africa’s economy is on the rise, but it still faces challenges such as political risk, currency volatility, and regulatory complexity. Yet, for investors willing to look beyond short-term noise, it offers substantial returns. Structural growth, improving governance, and expanding domestic capital markets are shaping a promising future.

Africa offers genuine growth and uncorrelated returns in a world where traditional investments are increasingly aligned. ASEF provides a disciplined, research-driven way to access this opportunity. For more information, contact our team at [email protected] or visit our website or LinkedIn page.

Africa Select Equity (SICAV) plc is licensed as a collective investment scheme qualifying as a Maltese UCITS by the Malta Financial Services Authority.