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Apis Launches Emerging Markets Financial Services Fund – Wall Street Journal

Strong appetite for investments in financial technology has prompted the launch of a private equity firm dedicated to the sector in emerging markets.

Our sister publication Financial News reports that Matteo Stefanel, formerly a partner in emerging markets private equity firm Abraaj, has set up Apis Partners with Udayan Goyal, a founder of fintech investment and advisory firm Anthemis Group, with the two aiming to raise their first growth fund of between $250 million and $300 million. Global fintech investment more than tripled from $928 million in 2008 to $2.97 billion in 2013, according to a report published in March by consultant Accenture . Banks have also increased efforts to fund early stage companies, with launches by Santander andHSBC in the past three months.

Private equity firms including Bain Capital, Nordic Capital and HgCapital have also made large investments in the sector in Europe in the past year. The Apis fund wants to invest in financial and business services firms in Asia and Africa that are seeking to open up banking to people through new technology.

Stefanel said that much of the innovation in financial services was coming from Africa and south Asia, where many people do not have access to a bank account and instead rely on new technologies, such as mobile payments, to make purchases and transfer money. He said: “We are talking about 2.2 billion out of the 2.5 billion unbanked people who are in our reference markets. That means a 2.2 billion people market that is untapped.”

The advent of new and cheaper technologies, such as mobile banking solutions, is helping individuals in historically unbanked regions gain financial access. This scenario, coupled with favourable demographic and economic conditions, as well as the lack of alternatives, means adoption of digital financial services in emerging markets quicker than in developed economies, Apis believes. In turn the technologies created and perfected in emerging markets could later serve as models for innovation in developed economies, the firm says.

Stefanel said, “We find that reverse innovation, the concept of taking business models from markets that have refined them because there is no alternative, can be extremely advantageous to European and North American markets always in search of ways to save money to distribute financial products.”

Both Stefanel and Goyal previously held senior positions at Deutsche Bank . Stefanel was co-head of emerging markets in the financial institutions group before becoming a senior partner at Middle East-based private equity firm Abraaj in 2007. Goyal was global head of financial technology advisory at Deutsche Bank until 2009, and then went on to set up fintech corporate advisory firm FT Advisors and Anthemis Group.

By Becky Pritchard and Anna Irrera. Read original post here.

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