Jerome Booth, Co-Founder of Ashmore Group and Chairman of New Sparta Asset Management. Credit: institutionalinvestor.com
Think emerging markets economies are fundamentally riskier than so-called core markets like the U.S., the U.K. and Germany? Think again. At least that’s what British investor and economist Jerome Booth believes, and the co-founder of emerging-markets investment giant Ashmore Group is putting his money where his mouth is.
Booth, 52, helped launch London-headquartered, $58.9 billion Ashmore in 1999 and served as the firm’s head of research through 2013. After spending a couple of years snapping up telecommunications, film and other businesses around the world through New Sparta, his London-based private investment office, he’s returning to his asset management roots.
Booth’s newest venture – New Sparta Asset Management (NSAM), which he expects to be up and running by mid-2016 – will use a specialist sector strategy to invest in private businesses in emerging markets. Starting early next year, NSAM plans to raise between $250 million and $500 million from global institutional investors, according to head of distribution Mark Weiller.
Booth’s Core-Periphery Disease theory, partly outlined in his 2014 book Emerging Markets in an Upside Down World: Challenging Perceptions in Asset Allocation and Investment, suggests that investors worry too much about how decisions in developed countries affect developing economies, because causality works both ways. Central banks in China, Brazil and other developing countries hold a total of roughly $11 trillion in core sovereign debt, he says, and sovereign wealth funds hold an additional $3 trillion to $5 trillion. The recent sell-off in emerging markets could persuade some of those banks to shift out of U.S. Treasuries and euro zone government bonds and into cheaper emerging markets, which could rock the developed world, he contends.
Booth, who says he still owns a significant stake in Ashmore, will serve as chair of NSAM and will chair the investment committee. Notable hires include Ashmore alumni Ousmene Mandeng, former deputy chief of the general resources division with the International Monetary Fund’s finance department, as head of research and development; and Weiller, who spent a decade with the firm. At first NSAM will focus on building out renewable and conventional energy sources in sub-Saharan Africa, mainly by constructing and financing power stations.
Booth, who holds M.Phil. and D.Phil. degrees in economics from the University of Oxford, believes Africa is hungry for private energy investment.
Source: International Finance for Global Investors | Institutional Investor
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