Gensec, the South African investment bank, has announced plans for a venture capital fund focusing on Irish and European IT companies. The Gensec Ireland Venture Capital fund hopes to raise e50 million by year-end and will be listed on the Irish stock exchange.
Through Gensec NSA Equity Fund, the bank has been investing in South African private equity for eight years and as of February 2001 it was managing over R1.5 billion (e215 million) on behalf of third party investors. The bank’s commitments include the country’s first biotech fund and two technology funds, Archway I and II. Shane Lynch, a member of the team managing the new fund and previously an equity analyst at Goodbody Stockbrokers, said: “With the launch of this fund we are looking to replicate our investment model in Europe and internationalise our activities.”
Gensec is currently marketing the fund in South Africa and hopes institutional investors there will contribute e20 million through offshore funds. A further e25 million will be sought from European investors. As the fund’s cornerstone investor the bank has committed
e5 million through Gensec Ireland. This division was set up two years ago and mainly operates in the domain of asset management. However, investing directly from the bank’s balance sheet it has made over a hundred IPO investments in European technology companies. These include Irish company Riverdeep (RVDPV), a NASDAQ listed software company offering web-enabled learning solutions and Temenos, a Swiss-based financial software company poised to list on the Zurich stock exchange.
The fund is looking for companies, the majority of which will be Irish, in the software, communications, Internet infrastructure and e-business applications sectors. It will act as
co-investor in rounds proceeding an IPO and not as an early stage investor. Committing an average of e5 million it will take stakes of around five to ten per cent in established,
high growth businesses. The first investment should be announced shortly after the fund’s first close at the end of August. This is Gensec’s first European fund to raise money from third parties and it will run for five years.
The fund hopes to draw deal flow from the network of contacts Gensec has developed in Ireland and Europe. Paul Coningsby heads the bank’s technology team in Johannesburg and is also a member of the fund’s investment team.
He says: “A combination of foreign direct investment, a well-educated workforce and substantial government support has led to Ireland becoming both a major manufacturer of technology hardware and the largest exporter of software in the world.” The final member of the team, which is based in Ireland, is Steve Wood. The team continues to recruit.
An advisory committee of Irish entrepreneurs and individuals from business and technology will also be established.