The launch of the open-ended AFC Iraq Fund follows the hiring of Ahmed Tabaqchali, who joined the firm as chief investment officer of Iraq investments in November, said the investment manager, which focuses on investments in frontier markets.
“Iraq has the potential to be an enormously wealthy country, but has been held back by over 35 years of wars, crippling sanctions, and civil strife,” according to Tabaqchali.
“While the risks are probably higher than in other frontier markets, I see the perceived risk as being significantly higher than the actual risk,” Tabaqchali added.
The fund’s investment universe consists of local companies, which have their main business activities in Iraq as well as foreign-listed companies, which have a majority of their business in Iraq.
According to the firm, the fund provides investors an avenue to diversify their portfolio and gives access to the Iraqi market, which has a low correlation with global, emerging and other frontier markets.
The fund aims to capture value in growth companies over the next seven-to-ten years, targeting companies leveraged to Iraq’s post-conflict recovery and growth trajectory.
“The fund will capture returns linked to the resource-based upside derived from improvements in the overall economy, which will see significant benefits from the next commodity cycle upswing,” the firm said.
“Outside of post-conflict and oil price recovery opportunities, Iraq equities offer value and exposure to sectors less dependent upon oil such as banks, insurance, consumer goods and telecom among others.”