Angola Wealth Fund to Announce Policies, Appoint Auditors

Angola, Africa’s second-biggest oil producer, will publish the investment policy of its sovereign wealth fund in the first quarter of next year and appoint international auditors, Chairman Armando Manuel said.

The fund, announced on Oct. 17 with $5 billion in assets, will be established by the sale of 100,000 of Angola’s 1.8 million barrel-a-day oil output from companies including Exxon Mobil Corp., Chevron Corp., BP Plc and Total SA.

It will help the country rebuild from a civil war that ended in 2002 and ease the impact of volatility that prompted a $1.3-billion loan from the International Monetary Fund after crude prices fell in 2008. The IMF predicts the economy will grow by 5 percent next year.

“We are adopting a transparent and robust approach to communications and adhering to internationally accepted institutional governance principles,” Manuel said in an e-mailed statement.

The southwest African country’s credit rating may be upgraded if the fund helps eliminate the quasi-fiscal operations of state-owned Sonangol EP and ensures the oil company’s timely payment of oil revenue to the government, Fitch Ratings Ltd. said Oct. 23. Angola is currently rated BB- by the company.

A charter addressing social challenges and the selection of auditors will be published in the second quarter, followed by updates on large investments, consultants, and remarks from the board every six months beginning in the third quarter, Manuel said. The first audited annual report is due in the first quarter of 2014 and the fund is to be rated using the Linaburg-Maduell Transparency Index, Manuel said.

Advisory Council

Known as the Fundo Soberano de Angola, or FSDEA, the fund will be be managed by a three-member board led by Manuel, an adviser on economic issues to President Jose Eduardo dos Santos. The board has an independent advisory council, which includes the ministers of finance, the economy, and planning, as well as Central Bank Governor Jose de Lima Massano. The council will evaluate the fund’s performance relative to investment policies and benchmarks approved by Dos Santos, Manuel said.

Return on investment and the estimated inflow of $3.5 billion a year in oil revenue will keep the fund replenished, fund documents show. The focus will be weighted more on infrastructure spending -- because that’s where Angola’s needs are -- than commodity-price stability or long-term investment, according to the papers.

Quantum Global Investment Management AG, a closely held company based in Zug, Switzerland, that has experience in Angola, will run the fund’s day-to-day liquidity, the fund said. Michael Kaimakliotis is Quantum’s head of investments, according to the company website.

President’s Son

The board includes Jose Filomeno de Sousa dos Santos, the eldest son of the president and a former board member of Banco Kwanza Invest SA, where he oversaw an earlier version of the fund.

Also on the board is Hugo Miguel Evora Goncalves, a former senior manager at Standard Bank of Angola, and the Pension and Development Fund of Angola.

The fund will invest in securities and stakes in infrastructure and hospitality projects, domestic agriculture, water, power generation and transportation to attract foreign investment to Angolan infrastructure projects, Manuel said.

Petroleum products account for more than 60 percent of the economy, 97 percent of exports and about 80 percent of state revenue, according to the London-based Economist Intelligence Unit. Angola supplied 18 percent of China’s imported oil in September and 1.6 percent of the U.S.’s in August, according to data compiled by Bloomberg.

Nigeria, Africa’s biggest oil producer, signed its own sovereign wealth fund into law in May 2011 with an initial $1 billion.

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