Investors who took the plunge into Laurium’s African equities fund have scored a 100% return in just two years. But for Paul Robinson, who co-manages the Limpopo Africa Fund, you had to be there for the bad times, too, to take full advantage.
Take Covid and the start of the Russia-Ukraine war; the subsequent spike in interest rates and energy prices prompted wholesale capital flight – with foreign investors and local pension funds dumping shares across the continent.
It led to “crazy valuations”, says Robinson. “You’re [getting] 15%-18% dividend yields and 1.5 times p:e [price-earnings] multiples for really well-managed companies. So if you’re there for the long haul and are able to scoop that up, it makes for those really strong returns the following periods.”
It meant Laurium was able to deliver a dollar return of 29.6% in 2024 and then 57.6% in 2025 – after fees – thanks in part to the “amazing bargains” the fund was able to hoover up. Not to mention keep its nerve. That’s because the bad times can be very bad indeed: the lowest rolling one-year return since the fund was established in 2014 was -24.9%; not for nothing are African markets considered high risk.
“It’s been a really tough time for Africa with Covid and then the Russia-Ukraine war, and a very strong dollar,” says Robinson. “These currencies face a 5% headwind from the strong dollar every year – and it’s also meant that people have not had to invest in frontier markets,” he explains.
No incentive to invest
This was compounded by a “very tough” interest rate cycle thanks to a spike in inflation between 2020 and 2024, which led to extremely high local interest rates in Kenya, Egypt and Nigeria. Companies were forced to borrow in expensive currency or dollars, while pension funds – like those in Kenya – were able to score yields of as much as 18% in government bonds, so there was absolutely no incentive to invest in equities at all. By 2023, Keyan pension funds had as little as 8% exposure to equities, from a high of almost 25% a decade before.
But those high interest rates have now unwound and the dollar has weakened. Last year, the Ghanaian cedi, Zambian kwacha and Congolese franc all posted gains of between a quarter to a third against the US dollar; Nigeria’s naira gained about 7%, as did the Egyptian pound.
Meanwhile, economic reforms in many African states are starting to bear fruit. In Nigeria, for example, political reforms have prompted an increase in oil production at the same time as the oil price has risen. And in Kenya, exposure to equities has picked up to about 11% of the total. Says Robinson: “Every week, someone will tell us that a firm they haven’t seen in six or seven years is dipping its toe back in.”
Still, he says, “valuation is key”.
“That’s the bottom line whether you are going to get good returns or not. You can be in the best country in the world, but if your stocks are overvalued you are just not going to have good returns. And Africa – even after these results with shares up over 100% in the last two years – is still very, very undervalued.”
The Egyptian rebound
The Limpopo Africa Fund counts Egypt and financial stocks as its biggest holdings in the fund by region and sector, at 23% and 29% respectively.
Egypt is the most liquid market outside of South Africa, with a long history of capital markets culture and, unusually for African markets, a big retail investor base – which makes for decent liquidity.
The combination of earnings upgrades and cheap valuations is a potent harbinger of fat returns.
Take Egypt’s Commercial International Bank, which expects earnings to grow 20% to 85-billion Egyptian pounds in 2026. That puts the bank on a p:e of just 5.5.
“All the Egyptian companies, almost to a man, were very surprised at how well the second half of 2025 went, and that’s carried on into 2026,” says Robinson.
As for its exposure to financials, the fund holds banks in Kenya, Nigeria and Mauritius, as well as fintech and telecoms shares like Egypt’s Fawry and Telecom Egypt, which owns 45% of Vodafone Egypt.
Luckily, the fund also has a chunk – 6.2% – invested in mostly gold and copper mining companies.
‘A little bit lucky’
“Historically we haven’t owned too many resources in the life of the fund, but we increased our weighting starting about two years ago, in gold and copper mainly,” says Robinson. “We’re not claiming too much smarts there, and we got a little bit lucky, but we found some really interesting companies that we thought were undervalued.”
Asked whether they’ve made any big changes in the past couple of months subsequent to the jump in gold prices to above $5,000 an ounce, Robinson says not really.
“We’ve added a bit to Egypt in the fintech/telco space; we’ve added a bit more Kenya and a bit of Nigeria on the banks side. And we’ve increased our exposure to copper over the last 12 months.”
The question now is whether 2026 could be remotely as steamy as 2025. Perhaps.
“I think so; I think these macro tailwinds are proving to be bigger than anyone thought – including us – but we’ve found ourselves being not as positive as we should have been, in hindsight,” rues Robinson.
The return of other buyers is a good sign, too.
“Local pension fund investors are only just starting to come back; they’ve got a long way to go to catch up and foreigners are only just starting to come back so there’s a lot of momentum,” he says. “There’s a very real opportunity for stock-pickers and, relatively speaking, there are very few investors looking at Africa; so for me, personally, I think it’s by far the best stock-picking environment.”
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Top image: Rawpixel/Currency collage.
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