Apis exceeds target on debut fund – Exclusive

The Africa and south Asia finance sector specialist has amassed $260m for its first fund, which has a $300m hard-cap.

Private equity firm Apis Partners, which targets investments in financial services in Africa and South Asia, has beaten the fundraising target for its debut fund, amassing $260 million from a diverse investor base, Private Equity International has learned.

Apis Growth Fund I, which held a first close on $157 million in August 2015, had an initial target of $250 million and a hard-cap of $300 million. The fund is expected to hold a final close before the end of the year.

The investor base is roughly evenly split between development finance institutions, including CDC Group, FMO in the Netherlands, and Swedfund, financial institutions, including Old Mutual, and funds of funds, including South Suez Capital. The fund is offering its investors co-investment opportunities, managing partner Udayan Goyal told PEI.

Many of the financial institutions have committed to the fund in order to gain strategic insight into markets in which they are not currently operating, Goyal said.

“They are able to then look at these markets and look at the flow in these markets,” he said.

“Also in the case of someone like an Old Mutual or somebody who is in these markets, it gives them a privileged position in case they want to acquire the companies that are in the portfolio. We don’t give them any preferential rights, of course, but obviously being an LP and knowing about the company gives them a head start on anybody else.”

Apis is planning to make between eight and 12 investments from the fund with an average cheque size of $25 million, Goyal said. The fund, around two-thirds of which will be invested in Africa, has a geographic concentration limit of 25 percent per individual country.

The fund has already made three investments. For its latest, announced today, Apis teamed up with ICICI Venture to acquire a minority stake in Indian direct health insurance provider Star Health. The pair join existing shareholders, including Sequoia Capital and Tata Capital Growth Fund.

Founded in 2006, Goyal describes Star Health as “one of the most innovative health insurers”, offering both HIV and cancer insurance among its products. Unlike many other insurers, Star Health also handles all claims administration in-house.

“They use technology to improve the customer experience, and I think technology will continue to be a core part of how they grow their business,” Goyal said.

That focus on technology is the thread running through all Apis’s investments, he added.

“The core thread is the same, but we like to be in different sub-sectors of financial services because it gives us a bit of diversification.”

In December Apis made its first investment, acquiring a minority stake in MicroCred, which provides payment services in Africa and China to micro, small and medium-sized enterprises. In January the firm acquired a significant minority stake in Indian ATM outsourcing and services provider Electronic Payment and Services Private Limited (EPS).

Apis has “a couple” of investments that are awaiting regulatory approval before completing, and two further companies in the “priority pipeline”, Goyal said.

“We’ve deployed half the fund already in some senses, so we don’t have to rush it. We’re going to wait for the right opportunities.”