Apis debut fund on track to hit $300m hard-cap – Exclusive

The fund has completed its second investment since its first close in August, acquiring a minority stake in an Indian ATM outsourcing company, with more deals in the immediate pipeline.

Apis Partners' debut fund is expected to exceed its $250 million target and close fundraising on its $300 million hard-cap by the beginning of the second quarter, Apis managing partner Matteo Stefanel told Private Equity International .
 
Apis Growth Fund I, which held a first close on $157 million in August and targets investments in financial services in Africa and Asia, announced its second investment today. The fund has acquired a significant minority stake in Indian ATM outsourcing and services provider Electronic Payment and Services Private Limited (EPS).
 
Financial details of the transaction were not disclosed. Apis is planning to make 12 investments from the fund with an average size of $25 million, and the investment is understood to be in line with that average.
 
The fund made its first investment in December, acquiring a minority stake in MicroCred, which provides payment services in Africa and China to micro, small and medium-sized enterprises.
 
The firm plans to announce another transaction next month and a further one the month after. When asked about the pace of investment, Stefanel noted that the firm had been working on its pipeline for the past two years. “We held back the pipeline so are able to pace investments like this. We can't warehouse transactions.”
 
The firm considers financial services sub-sector and geographic diversification when investing and its next transaction will be in a different segment of financial services, Apis managing partner Udayan Goyal said.
 
“That doesn't mean we wouldn't do a transaction in the same market, for example the ATM market in Africa,” Goyal said. “If something did come up there we would be delighted if it had the same growth fundamentals as we have here.”
 
Mumbai-based EPS manages about 5,000 ATMs across 28 Indian states for banks including State Bank of India, Bank of Maharastra and Canara Bank, with contracts to deploy 2,000 more, according to a statement.
 
Apis was attracted to the company because of its management team that has “built a remarkable company in a short time” and its growth potential, said Goyal. As part of the Indian government's financial inclusion initiative to expand the use of bank accounts and cards, the domestic ATM network is growing, he said. 

There are currently only 15 ATMs per 100,000 adults in India, according to Apis. The total number is expected to grow from about 230,000 today to 550,000 in 2021.
 
The firm has invested in EPS alongside existing investors Dutch development bank FMO, which is an Apis LP, and Indian private equity firm Aavishkaar.
 
Apis plans to build on contracts from state-owned banks, which at the behest of the government are expanding their ATM networks, and also target smaller, “sub-scale” ATM outsourcing companies managing less than 5,000 units and incorporate them into the EPS platform, Goyal said.