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Date of incorporation: March 2016
Preference shares in issue: 4 143 332*
Auditor: Morison Mauritius
Preference share market capitalization: USD 4.3 million
Number of equity investment holdings: 5
Net asset value per preference share: USD 1.04


The Company’s objective is to generate above average investment returns from the investment opportunities the Directors introduce through their involvement with various investment structures and/or corporate networks, mainly in Africa. The Company evaluates investment decisions with the aim to deliver a total USD portfolio return of at least 12,5% per annum above the annual change in the United States Consumer Price Index over the lifetime of the investment.

The Company may invest in any asset class, listed or unlisted, in any investment market and in any currency provided 75% of its effective investment exposure (other than cash) is in Private Equity Assets. Any individual investment (at cost) may not comprise more than 30% of the total portfolio value at the time, or USD 8.0 million whichever is the greater.


2016 n/a n/a -2.01% 1.64% -0.40%
2017 5.88% 3.95% 3.73% -8.87% 4.04%


(USD’000) Novare II Alphamin Addis Pharma African Alpha NewLook Equity total Cash Total Total %
Nigeria 872 - - - - 872 - 872 19.8%
Zambia 197 - - - - 197 - 197 4.5%
Mozambique 281 - - - - 281 - 281 6.4%
DRC - 935 - - - 935 - 935 21.2%
Ethopia - - 345 259 - 604 - 604 13.7%
United Kingdom - - - - 212 212 - 212 4.8%
Cash & net working capital 56 - - - - 56 1,254 1,310 29.7%
TOTAL 1,406 935 345 259 212 3,156 1,254 4,410 100.0%


(USD’000) Novare II Alphamin Addis Pharma African Alpha NewLook Equity total Cash total Total %
Mining - 935 - - - 935 - 935 21.2%
Property 1,349 - - 259 - 1,608 - 1,308 36.5%
Manufacturing & Distribution - - 345 - - 345 - 345 7.8%
Retail - - - - 212 212 - 212 4.8%
Cash & net working capital 56 - - - - 56 1,254 1,310 29.7%
TOTAL 1,406 935 345 259 212 3,156 1,254 4,410 100.0%


The negative quarterly performance of the portfolio is attributable to mark to market adjustments on Alphamin and New Look as follows:

- The Alphamin Resources Corp. (“Alphamin”) share price closed at C$ 0.29 cents on 31 December 2017, being 25% lower than at the close at the prior quarter. This is as a result of Alphamin being in the midst of a major equity capital raise during December 2017. Alphamin subsequently announced on 22 January 2018 that it had successfully raised C$ 56 million at C$ 0.32 cents per share which will be applied to constructing the mine, and which allows it to access the bulk of the USD 80 million debt funding for the project.

Mining Review News

The DRC country risk perception complicated the Alphamin fund raising, but having completed it, Alphamin has cleared a major hurdle to unlocking the financial promise of the project. Mine construction is progressing well, and our expectations for the performance of the Alphamin investment remains intact. APEO agreed to invest a further USD 400k into Alphamin, (which includes receiving 600,000 warrants exercisable at C$ 0.40 cents in January 2021), as part of the fund raising referred to above (effective January 2018), following on from our original investment of USD 1 million made at C$ 0.30 cents late in 2016.

- New Look Retail Group Limited (“New Look”) bonds (which APEO invested into in September 2017) traded at a lower value on 31 December 2017. At the time of investing into the New Look bonds the indicative annualised yield to maturity was 25%. The bonds were (at the time of investing) trading at a 50% discount to face value because of investor concerns regarding the viability of New Look given its very high gearing which, originated from its take-over by Brait SE (“Brait”) in 2015, and its weak subsequent trading results.

We were (and still are) of the view that the Brait team has the ability and track record to follow through on its announced intention of turning New Look around. New Look has stated it has adequate working capital facilities, its debt matures from 2022 onwards, and the business has recently been breaking even on a cash flow basis, giving it time to recover. A negative development since investing in New Look is that Christo Wiese, Brait’s anchor shareholder has lost a significant portion of his personal wealth via the demise of Steinhoff. This appears to have impacted negatively on the market’s view of Brait’s ability to turn New Look around, and thus affected the New Look bond price in December 2017.

An analysis of New Look’s constitution and bond trust deed reveals that any restructuring of the terms of the bonds are very onerous for New Look to undertake. In order to earn an attractive return as bondholders, we do not need the business to perform, just for New Look to survive. New Look has recently announced it is working on a proposal for creditors to restructure its debt, and there have been press reports recently that major New Look bond holders have appointed advisors to represent them:

Press Report

We await more clarity before making further investment decisions on New Look.

The remainder of the APEO investment portfolio performed according to expectation:

- Novare Africa Property Fund II (“Novare II”) is a USD 410m fund that develops retail and commercial developments in major African cities, comprising of four projects in Abuja and Lagos, four projects in Lusaka and three projects in Maputo. Fifty four percent of the investment commitment towards the fund had been drawn down by 31 December 2017. We expect that the remainder of the undrawn commitments of USD 900k will be called for within the next year to complete building projects.

During the past quarter Novare II successfully completed and launched Novare Gateway mall in AbujaGuardian Article and the Novare Matola mall in Maputo View here. Novare II will soon start planning its exits from its investments over the next few years. Economic prospects look far rosier in Nigeria, Zambia and Mozambique than six months ago, and the targeted Novare II annualised IRR of 20% remains intact. No changes were made to the valuation of Novare – the next external valuation should be available by 31 March 2018.

- Addis Pharmaceutical Factory Share Company (“Addis Pharma”) is the leading pharmaceutical manufacturer based in Adigrat, Northern Ethiopia. APEO acquired a small share when a co-investment opportunity with other established private equity players presented itself in 2016. Addis Pharma manufactures a large number of products across different therapeutic categories that it supplies to both the Government and private sector in Ethiopia.

The operations continued to grow to December 2017 (26% growth quarter on prior year quarter) and traded profitably (29% EBITDA margin). The very significant expansion of the production facilities are progressing well. The new plant is expected to be commissioned later during 2018, and will create the necessary capacity to take up a bigger slice of the local pharmaceutical market in line with government stated policy of promoting import replacement. Accessing foreign currency for importing raw materials remains a constant issue to be managed by the company.

The USD valuation of the investment was increased by 33% from original cost in line with an external valuation received from the managing private equity partner.

- African Alpha FCMG group (“African Alpha”) is a fast moving consumer goods (“FMCG”) company in Ethiopia managed by the same private equity partner we have in Addis Pharma. It comprises of water bottling plants, a soap and detergent factory, an edible oil bottling plant, a milling and pasta factory, a confectionary plant, and a dairy plant, all situated in and around Addis Ababa.

The experienced FMCG management team appointed to combine procurement, marketing, administration, and sales and distribution activities across the businesses is settling down and starting to show results. African Alpha is of the view that is has a real chance of becoming the dominant FMCG player in Ethiopia, given the lack of capital and narrow range of products owned by local competitors, and the fact that the global competitors appear to only be interested in importing limited product ranges, not manufacturing locally.

The production capacity of the oil business has been expanded more than tenfold, with a commensurate increase in sales starting to come through. The soap business is running at full capacity and a new facility which will allow for expansion has been identified. The pasta business is experiencing good growth, with further expansion possible. The group consolidated its two water bottling plants under one manager, but experienced production problems in the past quarter which is getting urgent attention. The dairy business showed significant growth, with further improvement expected. Importation of raw materials in the form of accessing foreign currency and logistics across most of the businesses remains a daily challenge.

The African Alpha group’s aggressive internal targets are to grow sales from USD 22million in the year to June 2017 to USD 38 million (June 2018) and then USD 75million (June 2019), and to achieve an EBITDA margin of 20%. Given the relatively short period we have held the investment, we will wait for results to come through before revaluing the investment. Given the evidence we see that the group is growing at a very high rate, we agreed in November 2017 to investing a further USD 500k into the group, to be effected in January 2018.

All the businesses have in country recognized brands, and a new management team with strong international FMCG experience was assembled over the past year( largely from India) to extract value from the group by combining procurement, marketing, administration, and sales and distribution activities across the businesses which were all operating separately from each other before.

- The APEO investment committee approved an investment into Hastings Group plc (“Hastings”), one of the fastest growing general insurance providers to the UK market with a market share of 7.2%. It has a unique and very profitable business model focused on acquiring business largely through online third party aggregators (i.e. cost effective lead generation), and differentiates its insurance premium rating by applying sophisticated algorithms to predict potential customers’ propensity for loyalty (i.e. staying with Hastings) and fraud, both factors which play a big role in customer profitability. Hastings is listed on the LSE, and APEO has commenced accumulating an exposure via contracts for difference. Our strategy is to wait for dips in the share price. Our exposure at year-end was only USD8k.


APEO commenced a fund raising round partially underwritten by the directors (USD 1.5 million). To date we have received in principle commitments of USD2.7m. The equity raise is expected to close in February 2018 at the latest net asset value per preference share.

After completing the above capital raising, and providing for future draw- downs from Novare II, and completing the committed investments into Alphamin and African Alpha alluded to above, APEO will have USD 2.1 million in cash available for future investment. Our investment strategy in applying the proceeds will be to continue lending much greater weight to opportunities where at least one APEO directors has an active involvement and/or a detailed understanding of the quality of management and the risk / reward potential of the investment.

We are holding the cash requirements for future investments and capital calls in a money market/short dated bond fund which achieved a USD 7.2% return in 2017.


Adriaan van Wyk, a significant investor in APEO has joined the board and investment committee with effect from December 2017. We look forward to drawing on his experience and ability to source unique deal flow for APEO. His curriculum vitae is set out below:

Adriaan is co-founder of SourceCode Technology Holdings, Inc. – the developer of K2, a global leading software platform for Business Process Management and Application Development. He and his co-founders grew K2 from a small South African start-up, to a global software company headquartered in Seattle, Washington. He was K2’s CEO from 1997 to 2017, having recently retired. He remains an active K2 board member and the largest individual shareholder. He is based in Seattle, WA, USA.


We remain concerned about the general highs of global stock markets, and will continue to weigh additional investments largely towards cheaper private opportunities. Our investments remain on track to better our underwriting criteria of US inflation plus 12.5% over the next few years. We continue to search for attractively priced investment opportunities where we have good insight into the potential risks and rewards.


Rudolf Pretorius

Brendon Jones

Brett Childs

Adriaan van Wyk

James Henry


This document is intended to be utilised for information purposes only. Should you choose to use this document for any other purposes other than information, you should do so with the assistance of professional advice. APEO not is acting or purporting to act in any way as an advisor. If you rely on this information for any purpose whatsoever, you do so at your own risk. APEO does not accept any liability of whatever nature and howsoever arising in respect of any claim, damage, loss or expense, whether caused directly or indirectly including consequential loss or loss of profit, arising out of or in connection with you, the user, on the contents of this document, or the user of the information products and services described in this document. This document is for information purposes only and does not constitute or form part of any offer to the public to issue or sell, or any solicitation of any offer to subscribe for or purchase an investment, nor shall it or the fact of its distribution form the basis of, or be relied upon in connection with any contract for investment. Investors should take cognisance of the fact that there are risks involved in buying or selling any financial product. Illustrations, forecasts or hypothetical data are not guaranteed and are provided for illustrative purposes only. The value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. Past performance is not necessarily a guide to future performance and no guarantees are provided. The user agrees to submit exclusively to the law of the Republic of Mauritius and the jurisdiction of the courts of the Republic of Mauritius in respect of any disputes arising out of use of this document.

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