Futuregrowrh Announces Plans To Launch Its Futuregrowth High Growth Development Equity Fund. Futuregrowth has announced its intention to launch its Futuregrowth High Growth Development Equity Fund (HGDEF), targeting investments in early-stage businesses that will have a strong developmental impact. The Futuregrowth HGDEF will form part of Futuregrowth’s suite of developmental investment funds which cover a range of impact areas such as infrastructure, social services, clean power, agriculture, regional development, and more.
“We have been considering an early-stage equity fund for several years, watching the evolution of the South African market, considering South Africa’s strategic position for disruptive enterprises, and investing in several high-growth equity transactions” said Andrew Canter, Chief Investment Officer of Futuregrowth, “and we believe the time is right for a risk-seeking offering”.
Futuregrowth is a leading developmental investor and South Africa’s eighth largest asset management firm, with over 50 fund products, more than 25 years of track record, and a staff complement of over 100. The Futuregrowth HGDEF will sit alongside the Futuregrowth Development Equity Fund (DEF), which has accumulated a 16-year track record of investing in developmental unlisted equity. “Through the DEF, we have been investing in early-stage equity transactions for over nine years” says Amrish Narrandes, Head of Private Equity & Venture Capital at Futuregrowth.
“The new Futuregrowth High Growth Development Equity Fund aims to support South African entrepreneurs who push the boundaries with innovative technologies that change how we live. We believe that by backing South African startups, we can play our part in job creation and in growing our economy,” Narrandes added.
Futuregrowth has developed its deal sourcing capability through its substantial investment process and capabilities, as well as by fostering relationships within the South African venture capital ecosystem. Its network extends from startup founders to merchant bankers and other private equity/venture capital investors (including private individuals). In most cases, Futuregrowth has built direct connections with company founders and management teams, which has led to investment opportunities.
In some cases, equity opportunities have come about from Futuregrowth’s debt investment process.In addition, the team keeps a watchlist of declined deals and other companies of interest. “In most cases, Futuregrowth keeps declined deals warm in the event they turn the corner and become investment-ready opportunities at a later stage” says Narrandes. “We keep in touch with companies on our watchlist regularly, so when investment opportunities arise, we are top of mind.”
The Futuregrowth HGDEF will be a closed-ended, limited life fund with a four- to five-year draw period and a five- to six-year payback period. Futuregrowth is targeting R500 million to R600 million of committed capital, and its indicated fee will be 2% on committed capital plus a 20% incentive fee. The Fund will have a warm start, with an existing pipeline and team. There will be no asset transfers from the DEF. Futuregrowth has kicked off the fundraising process and is aiming for a first close by the end of 2022.
Futuregrowth Asset Management is a leading fixed interest investment company that, as at 31 December 2021, manages around R193 billion (+/- US$12 billion) of assets on behalf of its investors which are predominantly South African retirement insurance and retail funds. Futuregrowth has been the leader in responsible and developmental investing in the South African asset management landscape since 1995.