Actis closes $2.9bn Fund III

The emerging markets-focused firm has already invested 12% of the fund, which will limit its use of leverage to deals in South Africa and Southeast Asia.

Actis has closed its third fund on $2.9 billion, more than double the size of its predecessor, which closed on $1.4 billion in 2004.

The emerging markets private equity firm began fundraising in September 2007 with a $2.5 billion target and $3 billion hard cap.

Actis Emerging Markets III was placed by Helix Associates and counts 100 institutions as its limited partners; its largest investor is former parent CDC Capital Partners with a $650 million commitment. Actis spun out from CDC, a UK government-backed fund of funds, in 2004.

Jonathon Bond, partner in charge of investor relations, described the fund as “ideally sized” to continue the firm’s investment strategy in global emerging markets.

We don't need leverage to create returns.

Alistair Mackintosh

The fund is already 12 percent invested and 15 percent committed in eight transactions, including the $700 million buyout of power equipment maker Alstom in South Africa; a $50 million investment in a Chinese hot pot chain; and a $15 million investment in a copper and cobalt exploration company in the Democratic Republic of the Congo.

Alistair Mackintosh, chief investment officer, said Actis was well positioned to invest the bulk of the fund in 2009 and 2010.

“We’re investing in markets that are still forecast to grow between 2 percent and 7 percent next year. Entrepreneurs will need capital, and they won’t be able to access the public markets.”

Mackintosh also said that Actis would continue to limit its use of leverage to control investments in South Africa and Southeast Asia. “Elsewhere our returns are delivered by organic growth. We don’t need leverage to create returns. What we do need is cash flow we can re-invest in the businesses to help create growth.”
Using a network of 13 offices in 11 countries, Actis invests in Asia, Africa and Latin America. Last year, Actis was named best private equity firm investing in Africa in PEO's annual readers poll, the Private Equity International Awards.

In addition to private equity, the firm is also active in infrastructure and real estate. To date, Actis has raised $7.6 billion of equity.