Actis retools fundraise, head of IR to depart

Actis has cut the target and changed the structure of its fourth fund after spending almost two years in the market targeting a total of $3.5bn.

Jonathon Bond, head of investor development at emerging markets specialist Actis, will leave the firm after fundraising concludes on its latest global investment vehicle later this year, according to several sources with knowledge of the plans.

Actis declined to comment.

The fundraising period for ‘Actis Global 4’ is set to expire around November, sources said, and Bond, who is a partner and also head of fundraising and responsible investing, will leave the firm after that. He has spent almost 13 years heading up fundraising at Actis and its former parent CDC Group. During Bond’s tenure, Actis went from one limited partner to more than 160 and raised nearly $7 billion, according to a person with knowledge of the firm’s fundraising activities.

Bond was involved in negotiating the 2004 spin out of Actis from UK development finance institution CDC Group. Prior to joining CDC in 2001, Bond worked at HSBC Private Equity Asia (now Headland Capital Partners) from 1994, and prior to that spent time at Electra Private Equity and Bain and Company.

Strategy shift

Actis, meanwhile, has shifted strategy on its fundraising. Initially the firm entered the market with its global buyout Fund 4 targeting $2.2 billion plus region-specific investment vehicles for India, Africa, China and Latin America, bringing the overall fund target to $3.5 billion. The structure was similar to that of its Fund 3, which raised $2.9 billion in 2008.

However, the firm in consultation with its LPs decided to consolidate most of the regional vehicles into the main fund and reduce the target for Fund 4 to $1.6 billion, according to an LP source. As of January, the firm had raised about $1 billion for the global fund, according to a filing with the US Securities and Exchange Commission.

Actis now has the global Fund 4 and an African regional pool that it is raising, but has consolidated all the other region-focused investment vehicles into the global fund.

The prior fund, Actis Emerging Markets III which closed on $2.9 billion in 2008, was generating a 1.11x multiple and a 5.7 percent internal rate of return, according to a market source. The firm’s prior Africa side pool was producing an 18.2 percent IRR and a 1.54x multiple, according to performance information from the California Public Employees’ Retirement System, as of 30 September, 2012. Its prior Indian side pool was generating a 2.2 percent IRR and a 1.03x multiple, according to CalPERS information as of the same date.

Adapting to new dynamics

Actis’ moves to cut the fund target and consolidate the regional funds were not just in response to the overall tough fundraising environment, but also an acknowledgement of slower deal flow and smaller deal sizes in some of the emerging markets the firm targets, according to one person familiar with the firm’s thinking.

The firm wants to “remain focused on the mid-market opportunities” and avoid the “danger” of raising too much capital, the person said.

One LP who spent time reviewing Fund 4’s PPM but ultimately did not commit said it was not surprising the firm moved away from raising side pools of capital for specific regions, as that could be a hard sell for some investors. “Not every LP will buy into this approach … I know a lot of LPs who simply try to find the best team in a certain emerging market, irrespective of the group’s global reach,” the LP said. “Unless that LP determines that Actis does indeed have the best team in the market, then that LP is unlikely to move forward with Actis.”

Some investors will prefer to build their own global portfolio comprised of country-specific managers, but others believe strongly in Actis’ global approach. “I love the edge they can get from having people in all of the big emerging markets to swap notes on deal trends, macro issues, management stuff, etc,” said the LP. 

Yolanda Bobeldijk contributed to this report.