A new USD25m private equity fund has been raised by Aureos Capital, a global private equity fund management firm specialising in investing in small and medium-sized businesses in Asia, Afr
A new USD25m private equity fund has been raised by Aureos Capital, a global private equity fund management firm specialising in investing in small and medium-sized businesses in Asia, Africa and Latin America.
The Aureos Malaysia Fund has capital commitments of USD25m from Credit Guarantee Malaysia (a subsidiary of Bank Negara, the central bank of Malaysia), Employees Provident Fund of Malaysia and the CDC Group in the UK.
Sev Vettivetpillai, chief executive of London-based Aureos Advisers, which provides fund advisory services to Aureos Capital says: ‘Like many of the markets in which Aureos operates, the SME sector in Malaysia lacks finance to develop. However, these businesses are vital to the country’s economy.
‘The links and roles these companies have to larger businesses make them a key factor in Malaysia’s industrialisation programme. Finance currently comes from internally generated funds and backing from friends and family, but it is not enough. The lack of an active private equity sector in Malaysia means that there are substantial opportunities for us.’
A recent study carried out by the National SME Development Council of Malaysia concludes that one of the major constraints for most Malaysian SMEs is lack of collateral, which prevents them from securing the loan finance required to grow their businesses. Private equity is available, but thus far funding has been targeted at the very largest companies. The Aureos Malaysia Fund seeks fill the void and enable small and mid-cap companies to expand.
Aureos recently opened an office in Malaysia, staffed by a team of investment professionals with extensive experience in the local private equity market. Domiciled in Mauritius, the firm was formed in July 2001 to take over management of 14 funds originally sponsored by the CDC Group and to raise and manage a new generation of private equity funds under the Aureos brand focusing on expansion and buy-out opportunities.
Since its establishment, Aureos has achieved 117 exits, and as a result its legacy portfolio, which consisted mostly of early-stage venture investments in frontier markets, now comprises just 23 investments. Over that period, the firm has more than trebled its funds under management and has raised and/or managed nearly USD500m and extended its geographical footprint to more than 50 emerging markets.
Apart from its employees, Aureos shareholders include CDC Group, Norfund and FMO, the UK, Norwegian and Dutch development finance institutions respectively. Investors in its funds include institutional investors, foundations and trusts, family groups, high net worth individuals, development finance institutions and multilateral development banks.
Since 2001 Aureos has established the funds investing in Central America, East Africa, West Africa, Southern Africa, South Asia, South-East Asia, Central America and Malaysia. It is currently raising funds for Kula Fund II (Pacific Islands), with committed capital of USD16m and target capital of USD25m, the Aureos China Fund, with commitments of USD34.5m and a target of USD70m, the Aureos Central Asia Fund, with target capital of USD100m and a first close expected this month, and the Aureos Latin America Fund, with target capital USD300m and first close also expected in October. Next year Aureos is planning to establish a pan-Africa fund with some USD400m.
