Apis Growth Fund finalises first transactions

The emerging markets fund is targeting investments in financial services in Africa and Asia.

Emerging markets-focused Apis Growth Fund I is finalising its first two to three transactions across its target regions of Africa and Asia.

The fund expects to announce them in the next few months, Apis Partners co-founder and managing partner Matteo Stefanel told Private Equity International.

The fund, which held its first close first close on 10 August at $157 million, is targeting $250 million to invest in financial services in Africa and South Asia, including the Indian sub-continent, the Philippines and Indonesia. It has an active pipeline of 20 deals.

The fund started raising capital in May 2014 and plans to hold a final close a year on from its August first close.

“The first close was significantly more successful than we expected. We thought we would do 50 percent of the target,” Stefanel said.

Investors in the fund include family offices, corporates Intesa Sanpaolo and Old Mutual, the UK’s development finance institution CDC, the European Investment Bank, Dutch development bank FMO and Sweden’s Swedfund.

“These are not necessarily first-time fund investors,” Stefanel said. 

Investors were attracted by the fund’s sectoral focus as well as the track record in financial sector investing in emerging markets of Stefanel and co-founder and managing partner Udayan Goyal.

“Investors are getting smarter and they are getting fed up with generalist funds,” Stefanel said.

Stefanel previously worked at The Abraaj Group, while Goyal co-founded venture capital financial services investor Anthemis.

Apis Growth Fund I is targeting investments across financial services, from payments, savings and investments, credit, insurance and capital markets.

“We are targeting companies that are more interested in strategic opportunities, rather than simply capital and that shifts the conversation away from valuations to value-add,” Stefanel said.

The fund, which expects to spend more in Africa than Asia and invest about $25 million a ticket, will make about 12 investments, Udayan said.

When asked about the $15.9 billion of funds being raised in Africa, as reported by Private Equity International, and competition for assets and pricing, Stefanel said that the fund will not be competing with large buyout funds that have amassed capital to invest in Africa and is instead talking to entrepreneurs.

“The competition is in a different space of mega-funds and generalists,” he said.

The fund has seen deals priced at multiples of 1-1.5x book value. “That’s a seriously attractive entry price for a company that is going to grow 20 per cent a year in terms of profitability,” Stefanel added.