Matteo Stefanel, a managing partner and co-founder of emerging markets financial services specialist Apis Partners, generally agrees with the mantra that operational transformation is the key to unlocking value creation. Yet he believes private equity should avoid taking a hands-on role and leave it to the experts.

“I’m actually very suspicious of non-buyout GPs that say they go in and improve the operations themselves. I can tell you management teams not only don’t like it, but see no value in it, despite the claims of the various GPs,” Stefanel said.

“⁠It’s really important to know what you know and what you don’t. And the reality is that our value is as a connector. We are a market intermediary. We are a market player. We are a connector. We are subject-matter experts, not operational ones but we bring the operational experts.”

Fellow managing partner and co-founder Udayan Goyal said Apis applies an ecosystem network approach to sourcing, evaluating, working with, and eventually exiting its companies. This approach draws on his and Stefanel’s history as bankers in the financial technology space, part of teams that were responsible for taking the likes of Visa and MasterCard public.

“That network has two aspects to it. One is relationships that we built that span multiple decades of being in the business. The second is a knowledge base of understanding their strategy, business models, value chains, how products operate,” added Goyal.

“We are slightly different to most GPs, because they tend to be more reactive to what is available in the market, rather than taking this very top-down, thematic approach. We find companies, figure out which are the interesting ones, and get to know them, taking typically six to 24 months before actually making an investment.”

Singapore-based Thunes, a portfolio company that provides cross-border payment infrastructure, offers a case in point.

Peter De Caluwe co-founded Thunes in 2017 and was CEO until early 2024, though Stefanel and Goyal met him a decade earlier during his time in charge of PayU, the fintech and payments business of Prosus. They later hired him to advise on a 2019 Apis investment in Indonesia-based fintech provider Tutuka, which led to similar due diligence roles on other deals.

When Apis invested in Thunes last year – as co-lead in a USD 150m Series D with Vitruvian Partners – Stefanel and Goyal were instrumental in De Caluwe’s simultaneous reinstatement as CEO.

“That is the commonality among all of these value creation processes – that we speak the language of our CEOs and founders and that we understand the industry almost as well as they do. I will never claim that we know everything about a company as well as its operator, but we are very close to that,” said Stefanel.

Apis, which has around USD 2.1bn in assets under management (AUM), was established in 2014 by Stefanel and Goyal, who previously crossed paths as employees of Deutsche Bank. They aimed to prove that incorporating principles of impact and financial inclusion into financial sector investment could still generate good returns.

The team has grown from seven to 55, of which 29 are investment professionals. There are offices in Singapore, Dubai, and London, which serves as headquarters.

“⁠Management teams sometimes feel like private equity guys disappear after an investment and reappear five years later for an exit. Since day one, we are going to be the ones that they’re calling at 2am when they have issues they need help with or bounce ideas around their new strategy,” said Stefanel.

“⁠It needs to be a partnership not just by name, but in actuality. I have to say that is a very intense model, and it relies on us having true experts on our roster – these are true barriers to entry into our sector.”

Apis raised USD 287m for Fund I in 2017 and then scaled to USD 563m in 2019 for Fund II. Fund III is said to be in the market with a target of USD 1bn. For the first time, it will be separated into two vehicles: Global Growth Fund III and Growth Markets Fund III. The former targets Europe, while the latter is for Asia and Africa. Stefanel declined to comment on fundraising.

The strategy focuses exclusively on high-growth financial services and related business services companies in emerging markets of Africa and developing Asia ex-China.

There have been 21 investments and 14 exits so far. Fund I, which made 10 investments deploying two-thirds of its corpus in Africa and one-third in Asia, is now fully liquidated. Fund II has made 11 investments with two exits and three partial exits to date.

Networking has driven much of this activity. For example, Apis organised a conference in Cape Town, South Africa as part of a top-down analysis of the payments landscape across Africa. It invited payments companies from across the continent and spent time with founders to identify investment opportunities.

From those conversations, Direct Pay Online (DPO) stood out. Apis backed the company in 2016 and exited in 2021 when it was acquired by Network International, a payments subsidiary of Emirates NBD.

Early planning helped facilitate the trade sale. Before making any investment, Apis holds discussions with at least five or six buyers to map out what an attractive exit could look like. It did this with DPO and came up with a list of characteristics that potential buyers need to see in an ideal target company.

Apis then identified 20 potential bolt-on acquisition targets to help strengthen the company’s market position. About seven of these were executed over the course of the investment.

M&A is a core value creation lever. Last year, Apis executed its largest-ever bolt-on when Coda, a Singapore-based commerce and out-of-app monetisation services provider, acquired European prepaid payments platform Recharge.

The private equity firm tracked the business for about three years before helping set up the deal. It also leveraged a relationship with Michael Kent, Recharge’s chairman, who Stefanel and Goyal knew Kent from having invested in one of his previous companies. He stayed on as the chairman of the merged entity.

Apis led a USD 20m round for Coda via Fund II in 2019. It has since sold 40% of its stake in the company for a 25x return, according to Stefanel.

“⁠Our job is to optimise outcomes for LPs, to maximise profits but also to minimise risk. So, the thing of “I can do a 3x now, or if I hang on until the end of the fund, then maybe I ask for a couple of extensions and I can get a 4x.” No, you’re not doing your job. You need to be disciplined,” he added.

Apis has an exit committee that reviews options to take money off the table in a systemic manner. It was put to notable use in 2019, when one-third of Apis’ stake in Indian health insurance provider Star Health was sold to WestBridge Capital – despite significant pushback from the buyer.

WestBridge wanted to do a complete buyout, but Apis managed to hang on to most of its stake. Star Health eventually went on to complete an IPO in 2021, which resulted in an 8x return for Apis in 2024 following a series of block trades.

Goyal said, however, that trade sales have been and will continue to be the firm’s most active realisation route. India is an outlier due to its healthy public markets. Star Health, for example, had become too large of an asset for any single strategic to swallow, so an IPO was the primary exit option.

But Apis has noted an expansion of the trade buyer universe in Asia, especially in India. Whereas once the firm targeted sales to global strategics, that is no longer necessarily the case.

“The Asian regional market buyers, or the Indian regional market buyers, which we didn’t have when we were in Fund I have started to pop up in Fund II, and now they’re becoming a much more viable exit route for us,” Goyal added.

This has shaped how Apis positions itself to investors. As global LPs have become increasingly cautious about emerging markets, the firm believes its emphasis on timely returns has helped sustain confidence.

The investor base comprises traditional institutional investors, development finance institutions and financial services companies such as banks, insurers, and asset managers. Europe accounts for about 55% followed by the US on 35%. Asia is a growth area, especially Japan, China, and Singapore.

Securing commitments from new LPs has been a challenge. Given heightened macro risks, geopolitical uncertainty, and risk‑averse mandates, institutional investor appetite for emerging markets is low.

US and European groups are the most risk-averse, Goyal noted. The exception is a small pocket of investors that may have impact mandates. Existing LPs, however, are unfazed, with Apis claiming a nearly 85% re-up rate.

“I can understand the hesitation that LPs have with emerging markets since they don’t get paid to take risks. We’ve all managed to actually return money and have great returns. Many large institutional LPs have gone cold on emerging markets, but this is both cyclical and offers opportunities to those who know how to find them,” said Stefanel.