MTN Group, a South Africa-based telecoms group, has become the cornerstone investor in the Amadeus IV Digital Prosperity Fund, which is the latest fund raised by venture capital firm Amadeus Capital Partners, taking it to a $75m first close.
The fund will see Amadeus invest in late stage venture and growth companies in mature markets, which are developing software designed to be used by the middle classes of Africa, the Middle East, Asia and Latin America.
The fund will be MTN’s main venture capital relationship, and the South Africa-based telecoms group is no longer pursuing direct investments, but looking to work with the portfolio companies backed by Amadeus. In August 2010, MTN signed a memorandum of understanding with US-listed chip maker Intel to develop broadband access in Africa. Part of this agreement included MTN investing alongside Intel Capital, the chip maker’s corporate venturing unit, in “emerging technology companies”.
Nik Kershaw, investor relations executive at MTN, said: “We do not have plans to give additional money to another fund. We are giving money in venture capital to Amadeus as a preferred partner. We talked with a whole range of businesses like Amadeus and decided they had a good fit with what we wanted to do.“
MTN has nearly 200 million subscribers and is the largest mobile operator in Africa and the Middle East.
Andrea Traversone, a partner at Amadeus, who is leading the fund, said: “During the past 16 years our portfolio companies have been selling into these markets. It is where the demand is. It is a thesis that has emerged from our own portfolio.”
Traversone provided the slide deck which details the reasons Amadeus decided to raise the fund, which shows spending by emerging economies on technology has already over-taken spending in developed markets, and that more than 80% of the growth in internet users is outside the US and Europe.
Amadeus said it was looking to raise further funds from both corporate and institutional investors. The corporate cornerstone commitment follows similar limited partnership agreements between other phone operators and VC firms, including Saudi Telecom and France-based Iris Capital.
Anne Glover, co-founder of Amadeus, said: “It is a great time to invest and we wanted to get on with it. We have held the first close in a way that it allowed us to start investing.”
The fund will be part of a multi-fund investment strategy, with Amadeus also looking to raise other funds including a UK-focused early stage fund.
Amadeus has more than 20 portfolio companies with customers in Asia, Africa and Latin America, including Cambridge Broadband Networks, Edgeware, Celltick and IP.Access.
Karel Pienaar, group chief strategy and mergers and acquisitions officer of MTN, said: “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 is setting up a strategic advisory board of experts, including MTN executives, to help portfolio companies in corporate strategy and in planning how to take their products to the market.