Actis tracks down South African deal

Emerging markets private equity investor Actis has acquired South African vehicle tracking business for $434m, according to the firm. It is its first investment in the crime sector.

Private equity firm Actis yesterday bought a 40 percent stake in Tracker, a vehicle tracking company having followed its progress over 18 months, according to the firm. The 100 percent buyout valued the company at $434 million, however the firm would not disclose its exact stake value. 

Other investors include The Mineworkers Investment Company, which currently holds a 30 percent stake in the business and investment bank RMB with 12.5 percent. 

The business, Tracker, recovers stolen vehicles to their owners. South Africa has the highest car theft rate globally, which makes insurance-based products in the region a good investment, according to Jonathan Matthews, a director at Actis. He notes that without a built-in tracking device, a stolen vehicle has less than 5 percent chance of being found. 

Tracker already has 600,000 subscribers, according to Matthews, and hopes to expand out of product making into a service provider. He highlighted a new trend of behavioural insurance, where insurance rates would be generated depending on how and how much people use their vehicles. Tracker wants to provide this information to insurance companies.

The crime sector is insurance driven, and therefore in emerging markets with high-levels of crime, can be a lucrative investment area. Matthews notes that in Brazil, regulation ensures insurance companies require stolen vehicle recovery systems in all cars therefore guaranteeing a customer base. 

Matthews says that since the announcement, two different sets of interest in the area have emerged within Actis. He would not disclose more details but noted that its Singapore office was looking at a similar investment.

Actis invests exclusively in Africa, Asia and Latin America and has a long-standing relationship with Africa. In 2004 Actis spun-out from government-owned financial development institution CDC Group, which is also an investor in the region. 

The firm is currently investing from its $2.9 billion fund III, which is well-over 50 percent deployed, according to a source close to the matter. It is in the process of launching a new, larger fund and has already started marketing to LPs.