Canadian firm Sarona Asset Management is launching a second frontier markets private equity fund that will invest in North African private equity managers, Mena FM can reveal.
The Sarona Frontier Markets Fund 2 will mimic the strategy of the firm’s original frontier markets fund, which was launched in January 2010 and focuses on managers that invest in SMEs in the developing world. However, Fund 2 will be closed-ended and target institutional investors rather than high-net-worth individuals, trusts and small foundations.
“We are looking for larger investors. We will be doing exactly the same strategy but scaling up,” Sarona’s investment relations director Jonathan Hera told Mena FM. Africa features significantly in Sarona’s frontier markets strategy, accounting for around 31% of the original fund’s portfolio, and a lot of this is in North Africa, according to Hera.
It will primarily target strategies that capitalise on growing consumer themes, as well as clean energy and sustainable forestry. While the company’s first frontier fund typically invested $2-5m per manager, Fund 2 will invest up to $20m at an average of $8-16m, said Hera, who added that Sarona ideally invests in local managers that have international fund experience but have returned home.
“We are looking for managers that are primarily third or fourth generation, but we understand there are also really good opportunities for first-time managers so we won’t exclude them,” said Hera. “We want managers that understand the marketplace better than we do and can deal more effectively
with local portfolio companies.”
Hera said the firm is in the process of fundraising and is hoping to raise $250m for the new fund by Q2 2012. The fund is targeting returns of 16-20%.
