UTIMCO seeks to boost exposure to Africa

CIO Bruce Zimmerman says the endowment is looking for new private equity partners on the continent.

The University of Texas Investment Management Company (UTIMCO), the $36 billion investment arm of the Texas A&M and the University of Texas systems, is seeking to increase its exposure to the African private equity market.

Speaking at the Private Equity in Africa conference in London, co-hosted by the Financial Times and the Emerging Markets Private Equity Association (EMPEA), UTIMCO chief investment officer Bruce Zimmerman said the fund currently has “a couple of hundred million dollars in African public equities” and around $150 million in African private equity.

“We put our little toe in the water with Actis Africa a number of years ago, and then we put our foot in the pond with Helios, and continue to partner with Helios. And we continue to be looking for other, additional partners,” Zimmerman said. “At $300 million, it’s less than 1 percent of our assets, and African GDP is clearly larger than that as a percentage of world GDP.”

Zimmerman later added that UTIMCO, the second largest endowment system in the US, uses percentage of world GDP as one way to assess investment opportunities and, were the endowment to grow to $50 billion over the next 10 years, “if the continent of Africa is, I don’t know, 3-5 percent, let’s say it’s 4 percent of $50 billion, it would be $2 billion, versus the few hundred million we have now”.

Zimmerman said UTIMCO “tends not to like the large funds” over $1 billion, but invested in Helios’ $1.1 billion third fund “because we thought it was the most experienced, steady set of hands”.

“Over time we’ll look to partner with smaller funds, newer managers, but again it’ll be in basic types of investments: consumer, industrial, health, education.”

UTIMCO has recently created an emerging markets group, and has hired Richard Rincon to oversee it, with a particular focus on Latin America.

“We’re in the market now to hire someone to help us focus on Asia, and I think in a couple of years we’ll look to hire someone to help us focus on Africa,” Zimmerman said, later adding that he foresees the need for a dedicated Africa specialist “because I can see that type of growth”.

Zimmerman said he sees “so much potential in Africa”, and is keen to invest time in developing relationships and getting to know the separate markets on the continent.

“We are long-term constructive on Africa, we think there’s a long way to go, and a big mistake would be if we tried to go in too heavily, too fast,” he said. “We’d rather kind of take our time.”