September 19, 2017 / 4:26 PM / a year ago

Angola SWF turns profitable on private equity investments, lower costs

LONDON, Sept 19 (Reuters) - Angola’s sovereign wealth fund said on Tuesday it had become profitable for the first time in 2016 thanks to the appreciation of its private equity investments in a deep-water port and agricultural projects as well as reduced operating costs.

The fund, which launched in October 2012 and is known by its Portuguese acronym FSDEA, had $4.99 billion in assets under management at the end of last year compared to $4.75 billion at the end of 2015.

Net income for the year came in at $44 million after a loss of $135 million in 2015, FSDEA said in a statement.

Private equity investments had increased by $260 million year-on-year with profits across two of its seven private equity funds offsetting losses elsewhere.

“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,” said the fund’s chairman Jose Filomeno dos Santos, son of long-ruling President Jose Eduardo dos Santos.

“In 2016, these assets contributed significantly to the net results of the Fund,” he said.

However, only $433 million of the $2.7 billion - or 54 percent of total assets - earmarked for investment in private equity, or unlisted securities and debt, had actually been allocated.

Fixed income investments valued at $1.1 billion had seen their share across total assets fall for the second year in a row to 22 percent from 25 percent. Operational expenses had fallen by 40 percent compared to the previous year, the fund said in its statement.

Africa’s second-largest oil exporter after Nigeria generates around 40 percent of its gross domestic product from crude output, and its economy has been hammered by the steep drop in the oil price, prompting government efforts to diversify its economy. (Reporting by Karin Strohecker; Editing by Janet Lawrence)

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