Why Hungarian-American Billionaire George Soros Is Investing In Africa
By Dana Sanchez Published: September 23, 2015, 3:51 pm
George Soros, AP
If billionaire George Soros is getting involved in Africa, it is because he knows that he can profit from it, according to investment newsletter ProfitConfidential.
With a net worth of $26 billion, Hungarian-American Soros is one of the 30 richest people in the world, according to Forbes. He has a presence in many countries, earning a reputation as a specialist in making a profit.
Soros, 85, is also skilled at combining business with philanthropy — a formula that’s working well for him in Africa, ProfitConfidential reports.
The first thing you see when you go to Soros‘s website is this quote, attributed, seemingly to him: “A full and fair discussion is essential to democracy.”
“He’s not really a bleeding heart liberal humanitarian,” says industry analyst Alessandro Bruno. “He has often speculated on currencies, achieving great profits for himself and leaving turmoil behind…If Soros is getting involved in Africa, it is because he knows that he can profit from it.”
The Soros Foundation has interests in LeapFrog Investments, a private equity firm, said Stephen Bowey, a LeapFrog partner, in an email to AFKInsider.
LeapFrog completed raising $400 million in 2014 to make socially responsible investments in Africa and Asia. Other investors in the funds set up by LeapFrog include JPMorgan, Swiss Re and Prudential, Bowey said.
LeapFrog, which now manages $500 million in assets, acquired a minority stake in Africa Finance Business (AFB) Mauritius, a financial startup in four African countries, according to ProfitConfidential.
AFB Mauritius lets mobile phone users access insurance products, savings, and credit. LeapFrog operates in Kenya, Ghana, and Zambia, and claims to have 300,000-plus customers. In 2014, the company acquired a majority stake for $19 million in Resolution Insurance, a Kenyan company specializing in health insurance.
Specializing in financial services in Africa and Asia, LeapFrog invests mainly in companies active in insurance, savings, pensions, and payments services—usually with customers who earn less than $10 a day.
Soros makes no pretense that it helps to create a positive image with his philanthropy. In turn, he secures benefits that mature in the longer term.
Soros and other billionaires have taken notice of Ethiopia, which issued a dollar-based bond to finance its growing agricultural production, power generation and transportation infrastructure including the 6,000-megawatt Millennium Dam hydroelectricity project.
Deutsche Bank and JPMorgan are involved, offering a 10-year bond yielding 6.75 percent. Ethiopia has been Africa’s fastest-growing economy for the past few years, following the lead of other African countries that issued Eurobonds, which, thanks to the perception of high risk, also offer high returns, according to ProfitConfidential.
Ethiopia’s energy plans will cost about $25 billion. “For this ambitious plan, the idea is to fund at least 50 percent from our own funds,” said Azeb Asnake, director of the Ethiopian Electric Power, in a June Reuters report. “The remaining funding will take the form of grants, soft loans and commercial loans from various investors.”
Ethiopia’s bond is based on its ambitious development goals, according to ProfitConfidential. It wants to raise at least $50 billion by 2020. Dams and power generation are key due to their crucial role in agriculture. Ethiopia also plans to become an electricity hub, selling power to its neighbors.
Soros is a master of financial speculation, an alchemist of finance, industry analyst Bruno said.
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