Asia Frontier Capital Ltd. to launch AFC Uzbekistan Fund
Ташкент, Узбекистан (UzDaily.uz) -- Asia Frontier Capital Ltd. will launch of the “AFC Uzbekistan Fund”. The company is now accepting subscriptions from investors and the first subscription deadline will be on 29 March 2019.
The AFC Uzbekistan Fund is managed under the executive leadership team of Thomas Hugger (CEO & Fund Manager) and Scott Osheroff (CIO of AFC Uzbekistan Fund) who between them have more than 40 years of investment experience as well as an extensive experience working in Asia, having held senior positions in Cambodia, Hong Kong, Mongolia and Myanmar.
As a result of President Shavkat Mirziyoyev’s economic reforms, AFC expects a strong equity market appreciation thanks to the recent abolishment of capital controls, Uzbekistan’s pursuit of privatizations and the introduction of a free float of the local currency.
The open-ended AFC Uzbekistan Fund is designed to offer investors high returns from growth in the equity market of Uzbekistan whilst offering a portfolio that has a low correlation with global equity markets. The fund aims to achieve long-term capital appreciation for investors by capturing value in listed growth companies over the next 5-7 years, predominantly targeting the private company segment and government privatizations.
The fund’s investment universe consists of local companies that have their principal business activities in Uzbekistan, as well as foreign-listed companies that have the majority of their business in Uzbekistan and countries bordering Uzbekistan (Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan and Turkmenistan).
AFC is the first non-strategic foreign investor in Uzbekistan’s capital markets to successfully repatriate principal and capital gains from the sale of listed equities on the Tashkent Stock Exchange, in March 2019, since the most recent introduction of capital restrictions in 2008.
With capital controls in Uzbekistan officially eliminated since 2nd March 2019, the AFC Uzbekistan Fund will issue new shares on a monthly basis and offer monthly liquidity with a three-month notice period for investors seeking redemptions.
The Uzbekistan government’s pursuit of privatization of all non-core assets and companies, including shares in listed companies, is expected to see the Uzbekistan equity market re-emerge from a decade of dormancy as liquidity and investor interest returns. AFC expects that many private companies will consider a listing on the Tashkent Stock Exchange as market depth improves and foreign investors return.
Thomas Hugger, CEO of Asia Frontier Capital and Fund Manager of AFC Uzbekistan Fund commented:
“Until recently, Uzbekistan was largely closed off from foreign investment since the 2008 Global Financial Crisis due to a repressive government and a currency peg coupled with restrictions on capital repatriation. However, having spent time on the ground recently, it is readily apparent that the Uzbek government is pursuing a rapid liberalization of the economy and society, transforming the country into a free market economy, free of capital controls and thus providing a great first mover advantage for Asia Frontier Capital. Unlike closed countries such as Cuba and North Korea, Uzbekistan already has a functioning stock market with 110 listed companies, with a total market capitalization of USD 2.1 billion and companies that trade at extreme discounts to comparable frontier markets valuations. The timing of the AFC Uzbekistan Fund provides an attractive entry point for long term investors as we anticipate this opportunity in the listed equities market will be recognized by other international investors in the near future, resulting in share price increases as valuations normalize with their regional peers and other Asian frontier markets.”
Scott Osheroff, CIO of AFC Uzbekistan Fund, commented:
“Asia Frontier Capital and its focus on countries where the ‘baby boom generation’ is moving into the middle class, driving increases in productivity and consumption, makes Uzbekistan an ideal market to pursue as it has the potential to evolve into a mini Vietnam of sorts in the Central Asian region. It boasts a population of 33 million, an established and growing manufacturing base and a diverse array of natural resources and agricultural commodities which make it unique among its Central Asian counterparts. As Uzbekistan continues its rapid reforms, it would not be unrealistic for the country to become the dominant economy in Central Asia as it emerging as a supplier of manufactured goods and premium agricultural products to Central Asian, Eastern European and East Asian markets, while simultaneously offering significant tourism potential at home, hosting the ancient Silk Road cities of Samarkand, Bukhara and Khiva.”