CAIRO: Private equity firm Actis announced this week the creation of a private equity fund worth $2.9 billion.
The fund, for which Actis executives have been working to raise money since 2004, exceeded its target of $2.5 billion. It was named Actis Emerging Markets 3 (AEM3) and will be dedicated to investing in emerging markets around the world.
“We had an original target of $2.5 billion and we’ve raised $2.9 billion. So we’re really pleased because this is a really good endorsement of the experience the investors have had with us, said Rick Phillips, a partner at Actis.
AEM3 is a follow up to the firm’s second successful emerging markets fund for which all capital was raised by 2004.
“Well, in terms of the size of the offerings in the amount we were raising, it is about double the size of the previous fund, said Phillips. “And also, whereas we had 35 institutions in the fund 2, we have 100 institutions exactly in fund 3.
Even as the firm began talking with investors and raising funds four years ago, they began looking for attractive areas in which to invest the money.
Actis has announced its intention to invest the capital in 30 to 40 firms in India, China, Africa, Latin America and Southeast Asia.
To date, about 12 percent of the funds have already been committed.
Phillips noted that Actis has a 60-year history of investing in emerging market and that finding investors, even in this difficult economic climate, was not much of a struggle.
“We only invest in emerging markets. We’re dedicated to emerging markets, he said.
The firm pegged minimum investment at $50 million.
Among the investments that Actis has already made is the much publicized Mo’men deal, announced in August of this year.
The $48.5 million investment in Mo’men, which will be used to help turn a family enterprise into an international brand, was representative of the kind of investment an emerging market fund demands.
“We are quite known for being invited to invest in a business that is going through a cultural change, said Phillips. “So, for instance, a really successful family business might decide to bring on board an international investor like us to help transition them to the next stage of their growth. .They want us to help them with that transformation of the business.
Sherif Elkholy, an investment principle at Actis, is intimately familiar with these kinds of growth-oriented investments. He was instrumental in not only executing the Mo’men deal but also in convincing the Mo’men management that an investment from Actis would serve in everybody’s best interest.
“Cash is available, he said, “and people are looking for value added investors that are actually going to deliver something over and above the capital, and we sort of developed a very good track record of being paid and helping these businesses go through the transformation.
In addition to the Mo’men deal, the nine other investments to which the fund is already committed include $65 million to the 7 Days Inn Group, a fast growing budget hotel company in China; $103 million to Ambow education, a player in China’s education industry; and Copperbelt Minerals, a copper and cobalt exploration company in the Democratic Republic of Congo.
The fund will focus primarily on two distinct types of investments.
“Number one, we provide expansion capital to growing businesses across the major countries, said Phillips. “And number two, is financed management buyouts.
Actis is present in 11 countries and hopes that its expertise will serve as a profitable bridge between global investors and partners in emerging markets.