Ashburton bets on MTN, Grindrod, Illovo for African returns

Ashburton Fund Managers Pty Ltd. is buying shares in Africa’s biggest mobile-phone operator, a logistics company and a sugar producer as it bets on the growing spending power of the continent’s consumers.

Ashburton, a unit of lender FirstRand Ltd. that manages the equivalent of more than $10 billion, has stocked up on MTN Ltd., shipping company Grindrod Ltd. And ILLovo Sugar Ltd. , the continent’s biggest producer of the sweetener, to gain access to a surging group of spenders, said Paolo Senatore, chief investment officer of Ashburton South Africa.

“We’re buying into companies with a big exposure to African consumers,” he said in an interview in Johannesburg on March 28.

South African companies are targeting customers in sub-Saharan Africa, where growth is forecast by the IMF to accelerate to 6.1 percent this year from 5.1 percent in 2013. The economy in South Africa, the continent’s biggest, is set to expand by 2.8 percent in 2014, compared with 1.8 percent last year, the IMF said in January.

Illovo, which is majority owned  by Associated British Foods Plc, is set to benefit from rising sugar consumption as people become wealthier, Roshini Moodley, a fund manager at Ashburton, said in the interview. Illovo’s capital expenditure in recent years will boost cash flow even as the price for sugar has been lackluster, she said. Mount Edgecombe, KwaZulu-Natal province-based Illovo also operates in Malawi, Swaziland, Tanzania, Mozambique and Zambia.

Grindrod, a Durban, South Africa-based company with interests in shipping and freight, is expanding into other southern African countries, including port terminals in Mozambique’s capital, Maputo, and a railway in Zambia. The company diversified its revenue sources and the contribution of shipping has declined, Moodley said.

MTN, the biggest mobile-phone operator in Africa’s most populous nation, Nigeria, gained 9.5 percent in March, paring its loss this year to 0.7 percent.