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Wednesday, 10 March 2021

Apis Partners is coming to Cairo

EXCLUSIVE- Global private equity outfit Apis Partners will have an office in Cairo and is open to Egyptian investments. The news comes in an exclusive sit-down with Apis Partner Hossam Abou Moussa (LinkedIn) one day after the announcement that he has left emerging markets private equity giant Actis to join the London-based firm PE firm, which specializes in financial services investments in growth markets. At Actis, Abou Moussa led a team that invested in financial services across global emerging markets and was chief operating officer of the firm’s private equity group. Actis has long been a high-profile investor in Egyptian companies.

Abou Moussa is careful to point out that his move to Apis is good for all parties — for Actis, for Apis and for his team. He and a team crossing over with him from Actis will continue to provide advisory services to Actis on the management of a number of investments, Actis partner Rick Phillips said in a statement yesterday.

As we reported yesterday, Apis is a financial services specialist with more than USD 1 bn invested in 25 financial services firms and a focus on environmental, social, governance and impact investing. The firm closed its USD 550 mn Apis Partners II fund on the eve of the covid-19 pandemic with a who’s who of limited partners including global banks, insurance companies, development financial institutions, fund of funds, pension funds, sovereign wealth funds, and family offices from the U.S., Europe, Africa, Middle East, and Asia. Apis’ most recent investment includes an undisclosed stake in South African digital player TymeBank, where Apis will also join the board.

We sat down (virtually) for a talk with Abou Moussa about the transaction. Edited excerpts from our conversation:

Why the move to Apis after an almost 15-year run with Actis?

Actis is evolving their strategy to focus on hard assets. [Editor’s note: Our understanding is that this includes asset classes such as real estate, power, infrastructure and digital infrastructure.] This is certainly the right strategy for Actis. And then there’s my team. I’ve been leading a team of specialist financial services investors. Along with two of them who are also joining Apis, I want to continue to do that. As we discussed when we sat down for our interview on Making It, financial services is my passion. (Tap or click here to listen to the podcast.)

I believe the broader opportunity in financial services — regionally and in global markets — is incredibly exciting and I want to continue investing behind this growth thesis — in financial services, financial services infrastructure, and fintech. This transition allows us to continue investing in the sector by joining forces with a market-leading specialist investor, while supporting Actis in delivering its financial services investments. This transition creates value for everyone.

In the release published yesterday, Rick Philips talked about a partnership that allows Actis to “retain” your knowledge, expertise and relationships for a “number of financial services investments.” Can you unpack this?

Supporting Actis and maintaining our cooperation is at the center of this transition. Actis was my “home” for almost 15 years, so I’m really delighted that we’re going to be able to continue working together. Actis’ objective is to deliver in the best interest of its limited partners by having the right teams support the management of the portfolio to its natural maturity.

While supporting Actis, I still want to continue investing in FS globally — and I want to join a talented, successful team where my team and I compliment their existing skills and track record. That’s why we’re joining Apis Partners.

What assets are included in the co-advisory arrangement?

We’re talking about investments and commitments that are roughly USD 300 mn at cost, although the portfolio’s current net asset valuation is higher. The assets include our investment in Fawry, the high-profile Egyptian financial services business in which Actis invested in 2019. They also include assets in some of our core markets in Africa, South and Southeast Asia, among them payment and lending businesses.

Just before covid hit, Apis closed a USD 550 mn fund — will you have access to dry powder to invest?

Absolutely. I’m not leading a ring-fenced team sitting in a silo. Of course, some of my colleagues and I will be more engaged in the Actis portfolio because we know it well. But as an Apis partner, we are going to utilize Apis’ resources to advise on that portfolio — and we’re going to join the rest of the Apis team in managing Apis’ existing portfolio and investing funds.

Will Apis be investing in Egypt?

We’re definitely interested in investing here, yes.

Do you have a timeline for your first transaction? Any color you can give us on your transaction pipeline?

Nope. [laughs] Look, there’s no specific allocation to any specific market. Apis is open to new ventures in Egypt, exactly as it was before my joining.

Will you be opening an office in Cairo?

Yes. As part of the transaction, Apis is currently going through the process of opening an office in Cairo that I will run. But the team in Cairo won’t be limited to working on Egyptian transactions — Apis’ team works fluidly across transactions regardless of geography. So we’ll be working on financial services investments in Africa, in our region, in South and Southeast Asia.

Last question. What’s so exciting about fintech?

For starters, it’s the scale of the potential. This is driven by under-penetration in emerging markets, where you now have government financial inclusion drives, population growth and technology all pulling in the same direction. But that potential is just about as stark in developed markets. Simply put, technology is driving change in terms of distribution and how financial services reach customers. This is a global-scale opportunity.

And secondly, it’s the chance to do good. Investing in FS has a real, positive impact. Everybody benefits: It enhances the quality of life of consumers. It helps businesses grow and be more efficient and effective. And it helps governments deliver a more financially inclusive economy — more people with jobs, more people and businesses paying taxes and participating in the formal financial system.

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