Aureos hits $323m for Africa fund

The emerging markets private equity firm expects to raise as much as $375m for its first pan-African fund. It is also planning a $250m south-east Asia fund.

Aureos Capital has garnered $322.8 million for its first pan-African private equity fund. Fundraising for the Aureos Africa Fund began around 18 months ago with a target size of $400 million.

The firm is confident it will have raised more than $350 million by the end of 2009, Sev Vettivetpillai, the chief executive officer of Aureos, told investors at the firm’s annual investor meeting in London today.

The fund will invest in small- to medium-sized businesses across Africa and has made nine investments totaling $106 million since its launch, across sectors including financial services, building products, real estate development and agri-business.

Davinder Sikand, Aureos’ regional managing partner for Africa, added that he expected the fund to close on between $350 million and $375 million.

“It was by no means an easy task to raise over $300 million for SME investment in Africa,” said Vettivetpillai, “It posed a real challenge.”

Vettivetpillai went on to say he believed up to 95 percent of African businesses are SMEs, and that without the capital available for these businesses to grow, the economies themselves would have trouble growing. “They are the engine of growth,” he said.

Investors also heard from Rod Evison, head of Africa for CDC Group, the UK government-owned fund of funds. Evison told assembled investors that private equity firms play four important roles in the economic development of emerging markets: they raise both local and international capital; they allocate capital efficiently by selecting the best investment opportunities; they add value to their portfolio beyond the provision of capital; and, in exiting the company, they shape their strategy for that company in the future.

In related news, Aureos today unveiled plans to raise a $250 million south-east Asia fund. The fund will focus on the Philippines, Indonesia, Malaysia, Brunei, Thailand, Vietnam, Cambodia and Laos, according to a report in this morning’s  Financial Times.

Aureos provides expansion and buy-out capital to SMEs across Asia, Africa and Latin America.