Ashmore founder takes on Africa’s biggest bottleneck

PowerlinesOne of the founders of London’s Ashmore Group plans to set up a private equity fund worth up to $500 million to invest in power plants in Africa.

Jerome Booth, who was part of the management buyout that established Ashmore Group in 1999, retired from the firm in 2013. He says he will create the new fund through New Sparta Asset Management, an investment company spun out of his private investment office.

The fund will finance a team of developers who have been constructing power plants in Africa for 25 years. It will aim to reduce energy shortages in Africa, which Booth describes as, “the number one bottleneck on the continent”.

Booth concedes that an obstacle to overcome is the generator-importing industry in Africa, which exists because the grid isn’t capable of meeting everyone’s energy needs.

“That’s been one of the factors that’s created resistance to having energy projects,” he says. “I’m not saying it isn’t a problem. But politicians know this is a problem and the electorates know. It’s difficult to see any politician in Africa standing up and saying they want less power.”

He also says the fund, which will be aimed at institutional investors, will insulate investors’ capital from volatility in the public equity markets.

Booth hopes to promote further private equity investments in emerging markets, which he sees as an under-explored asset class.

“Private equity in emerging markets is seen as a subset of private equity or a subset of emerging markets. But it needs to be huge. You can make a lot of money before the IPO [initial public offering].”

©2015 funds global mena

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