Amadeus Capital Partners, the technology investor, has held a First Close at $75 million on the Amadeus IV Digital Prosperity Fund, the first of its fourth generation of funds. The Fund will invest in late stage venture and growth companies, predominantly in mature markets, developing online and mobile applications and services targeted at the rapidly expanding middle classes in Africa, the Middle East, Asia and Latin America. Further investment is anticipated from other institutional and corporate investors interested in the Fund’s strategy.
The cornerstone investor in the Fund is MTN Group, the global telecoms provider headquartered in Johannesburg with operations in 22 countries. MTN is one of the top ten mobile operators in the world and the largest in Africa and the Middle East, with almost 200 million subscribers; it is an acknowledged innovator in mobile financial services, media and subscriber management.
Amadeus already has over 20 portfolio companies with customers in Asia, Africa and Latin America, including Cambridge Broadband Networks, Edgeware, Celltick and ip.access. The Amadeus team had begun to develop investment opportunities in online and mobile applications and services relevant to the needs of an emerging middle class of consumers, when they were approached by MTN. Amadeus and MTN worked together to refine an investment thesis focused on technologies that leap-frog desktop applications and services to those designed specifically for ‘mobile first’ and the technologies and platforms that underpin such services.
By the end of this decade, the aggregate GDP of the world’s developing economies is forecast to overtake the combined GDP of Europe and the US. Amadeus has identified 19 developing countries* as target markets for innovative online and mobile services. The wealthiest 20% of the population in these countries (excluding India) already comprises a market of over 300 million consumers. Wired Internet penetration, however, is still low (16% in Africa, 28% in Asia, 40% Middle East and 43% in Latin America); consequently the connected device of choice is the mobile phone.
The success of companies like MercadoLibre and OLX in Latin America, Fundamo and Naspers in Africa (and beyond) and GittiGidiyor in Turkey underlines the scale of the opportunity to build and profitably exit online and mobile services businesses in such markets.
The majority of the identified countries have rapidly growing economies, low government debt and an expanding middle class that is often young and urban. The demand for mobile and data services that meet the particular needs of this new group of consumers and the businesses serving them is huge; it is no surprise that eight of the world’s ten largest mobile operators are based in emerging markets and drive their business by exploiting new technologies, such as phone to phone airtime remittances and mobile wallets.
Commenting on the Digital Prosperity Fund, Amadeus CEO Anne Glover says: “This fund builds on our sixteen years of experience in investing in the telecommunications market, but with a new focus on a key driver of technology adoption – mobile usage by the increasingly affluent segments of developing economies. We are delighted to have found in MTN a corporate partner who is knowledgeable, well-connected and at the forefront of innovation in developing markets and we look forward to this partnership attracting the best entrepreneurs in the space, to create globally successful businesses.”
Karel Pienaar, Group Chief Strategy and M&A Officer of MTN, added: “This investment in Amadeus’ new Fund will give us exposure to a range of opportunities in online and mobile applications and services relevant to the needs of the emerging middle class of consumer. Investment in companies that focus on those technologies that leap-frog current applications fits well with MTN’s focus of driving sustainable growth through data services and related opportunities.”
Amadeus will constitute a Strategic Advisory Board comprising experts, including MTN executives, to assist portfolio companies in corporate strategy and in planning how to take their products to the market.
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