Ethos achieves first investment and first close for new large buyout Fund
- Ethos Fund VII targeting R8 billion
- R700 million investment into market-leading Fintech provider Channel VAS
- Maiden Ethos AI Fund I invests alongside larger buyout fund in Channel VAS transaction
Today, Ethos announced a R700 million investment into Channel VAS, a global Fintech provider. This is the first investment from the Firm’s new large-buyout fund, Ethos Fund VII. The Fund is targeting R8 billion in capital commitments from local and international institutional investors; a first close of R2 billion was achieved from South African-based investors with a view to having a second close of c. R4 billion from additional local investors by calendar Q1 2019.
Channel VAS is a market-leading provider of Mobile Financial Services, Big Data analytics and Airtime Credit Service (‘ACS’) to mobile subscribers in over 30 countries across Africa, the Middle East, Asia, Latin America and Europe. Working together with over 27 MNOs, the company currently serves over 650 million people globally, providing financial inclusion to more unbanked people every day.
Ethos CEO, Stuart MacKenzie, said:
“We are delighted to announce Fund VII’s first investment. The Fund successfully held its first close in October to accommodate this transaction and another that is expected to close in the next few months. We are equally excited to confirm that our new AI Fund is investing alongside Fund VII in Channel VAS. Channel VAS was a complex investment to process due to the business’ geographic footprint and technology model. It was the exceptional collaboration and collective insights between our deal, AI and value-add professionals that unlocked this uniquely attractive opportunity.”
Michael Jensen, Ethos partner and deal lead, added:
“Channel VAS is a sophisticated business with a deep, results-driven understanding of the mobile financial environment and an industry leading capability of increasing the penetration of airtime distribution while minimising default rates. This is achieved through sophisticated proprietary big data analytics tools and credit-scoring algorithms. The business model is highly scalable and presents a significant opportunity to expand their product offering into cutting-edge Mobile Financial Services.”
Channel VAS founder & CEO Bassim Haidar stated:
“We are excited to welcome Ethos on board as we continue our journey forward in this fast-moving Fintech world. As Channel VAS has been at the forefront of the Fintech revolution through mobile finance from its very beginning, working together with visionary investors such as Ethos will help us continue to expand our already massive geographical footprint at an even faster pace, bringing financial inclusion to more unbanked and underserved people globally through our innovative services.”
Over the past 24 months, Ethos has raised c. R6.5 billion from institutional and development investors: R2.5 billion for Ethos Mid Market Fund I; over US$100 million in the first close of Ethos Mezzanine Partners 3, which is targeting US$150 million by mid-2019; and R600 million in first close commitments to Ethos AI Fund I.
Ethos Fund VII is the successor to large-buyout fund Ethos Fund VI which has R8.6 billion of commitments. Ethos Fund VII is targeting a similar amount in capital commitments and is expected to hold a final close in mid- to late-2019.
Ethos has successfully concluded 11 investments in the past year and over 100 since 1984. With over 30 investment and value-add professionals operating on the ground in Sub-Saharan Africa, it is the most established fund manager in the region.