Profile: Apis' Matteo Stefanel

Matteo Stefanel had barely been able to settle into his new role as a partner at the Abraaj Group in 2008, but he already had his eye on a major trophy: the spinoff of Network International, the payments processing arm of Emirates National Bank of Dubai (NBD). 

The idea that a payments processor could successfully operate without the backing of a major bank had already been proven in the US over the previous decade, but in the Middle East the concept was still untried. Stefanel suspected that as storm clouds gathered over the global economy, NBD would welcome his proposal to give Network the flexibility it needed to grow beyond the financial institution that birthed it.

“This was a time when Dubai Inc. was having some issues, with the global financial crisis being felt there too,” Stefanel says. “Banks were concerned about the health of their loan books and the potential impact on earnings. Having a young man like me come in and offer a way to monetize this asset, which the bank didn’t previously fully appreciate the value of, resonated immediately. I showed up with a solution to something that wasn’t yet a problem, but could become one.”

Network became one of Stefanel’s most successful investments at Abraaj. The firm acquired a 49% stake in the newly independent company in 2011 and sold it to Warburg Pincus and General Atlantic five years later for a significant profit. 

By then, however, Stefanel was no longer with the GP. Convinced that the financial services opportunity deserved more focus than a generalist firm could provide, he established sector specialist fund. Apis Partners, which Stefanel launched with his friend and former colleague Udayan Goyal, aims to bring out the best new financial services innovations in Africa and Asia’s emerging markets. 

Almost Enron

When Stefanel entered the job center at Queen’s College in Oxford in 1997, working in private equity was far from the top of his mind. The Milan native was already a world traveler, having won a scholarship at age 16 to attend Pearson College in Canada. He subsequently went to Oxford as a politics, philosophy and economics major and had his heart set on a career in philosophy.

The practical challenges of earning a living as a philosopher intruded on these plans, however, and Stefanel kept his eye out for opportunities to leverage his other training. Two vacancies at the career center stood out: one was at boutique investment bank Wasserstein Perella & Co; the other was at Enron.

“I was really attracted by Enron, because they were offering a lot of money, and I was 21. But I couldn’t understand what they wanted me to do – and as it turns out neither did they,” remembers Stefanel. “So I ended up going to Wasserstein. This was mid-1990s investment banking – it was heavy duty. But I learned so much.”

He spent two years at Wasserstein as an analyst. This was where he was first steered toward the financial services sector – initially not due to any preference of his own, but rather because his supervisors and colleagues had an intuition that it would suit his style of thinking.

The hunch paid off. Financial services has formed the core of Stefanel’s subsequent career. By his estimate, more than 80% of the investments he has been involved in since then, either as an advisor or as an investor, have been in this sector. 

Stefanel’s affinity for financial services stems in part from its naturally close relationship with private equity and banking, which he sees as different branches of the same tree, with mindsets that are easily transferrable. More than that, however, the rapid development of technology is creating a wealth of opportunities for entrepreneurs to create new business models. 

This is particularly true in emerging markets, where booming internet connectivity is meeting pent-up demand from large, traditionally underbanked populations.

“On the supply side you have new distribution models and new manufacturing models for financial services,” Stefanel says. “And on the demand side you have new expectations, new demand, coming from consumers who have not grown up with a bank account and new generations who expect more from the service providers.”

As his passion for financial services grew, Stefanel found himself moving among a series of advisory roles at various banks. After Wasserstein he spent two years at Credit Suisse and then a year at Citigroup. His last advisory stint proved to be the longest, with Stefanel spending five years at Deutsche Bank as a managing director and co-head of the emerging markets financial institutions group.

By now, however, he was eager to move beyond the world of advising and start sourcing deals of his own. On the advice of a colleague at Deutsche Bank who was on the board at Abraaj – in which the bank was a shareholder at the time – Stefanel met with the firm’s leaders to see if there was a place for him. He was immediately won over by the work the team was doing.

“It was, at the time, the leading private equity player in emerging markets. That meant I could continue doing what I loved, which was financial services, in the places where I loved doing it,” Stefanel recalls. He spent five years at Abraaj, leading significant deals such as Network and the 2012 buyout of Saham Finances, the leading insurance services provider in Africa outside South Africa. 

Saham was anticipating strong growth in demand for non-life insurance as Africa’s middle-class population expanded and acquired possessions that they wanted to protect. Abraaj helped the company grow its footprint in Africa and the Middle East and professionalize its management structure before exiting to South Africa’s Sanlam Group in 2015.

Taking a leap

By 2013, Stefanel wanted to put into practice his vision of a PE firm dedicated to financial services investments. In this ambition, Stefanel was joined by Goyal, a native of India and co-founder of London-based global financial technology investment and advisory firm Anthemis. The two had met at Credit Suisse, where they joined the same team on the same day, and quickly formed a close bond. 

They had followed similar paths, even occasionally finding themselves on opposite sides of a negotiating table after Stefanel had moved to Deutsche Bank. When his friend joined Abraaj, Goyal decided to tackle the financial services opportunity in his own way, leading the advisory side of Anthemis while his co-founder led the investment business. Like Abraaj, Anthemis was focused on emerging markets, but targeting companies at an earlier stage of development.

Goyal was enthusiastic about Stefanel’s proposal to start their own fund, but leaving established roles to build a new PE franchise entailed a considerable level of risk. In the first year at Apis the two had only their own capital to offer entrepreneurs, and only the reputations developed in their previous positions to entice LPs to join their debut fund.

“The expertise in financial services of the previous 15 or 16 years was the only coin that we had at that point,” Stefanel says. “We had to ensure that the people who had seen us operating first as advisors, and then as investors, sometimes through the life cycles of their companies, were there to back us in raising money to do more of the same.”

Eventually, LPs began to respond, propelling the fund to a final close of $287 million last year. Development finance institutions like CDC Group are a significant part of the LP base, but more than two-thirds of the investors ended up being global banks and insurance firms. Stefanel and Goyal took this as a vote of confidence in their investment strategy.

Fund I is now almost completely invested, having built an Asia portfolio that includes India-based ATM provider Electronic Payments & Services as well as Star Health & Allied Insurance. The firm is already in the market with its second vehicle, which is targeting $400 million for the same growth capital remit. 

Stefanel claims that investor interest in the new fund has been strong, making him confident that Apis can grow in tandem with the financial services opportunity. Having started with a single office in London, the GP now has branches in Lagos, Johannesburg, Palo Alto, and Singapore. As momentum builds, maintaining the team’s passion for innovation in finance will be key.

“I don’t think anybody would be able to do what we do unless there was a very deep-rooted sense of fun with the sector that they chose and the counterparts they found,” says Stefanel. “Our entrepreneurs in many ways really are our partners, and the opportunity to cross-fertilize ideas from one part of the world to another, and to see the impact it makes, is fantastic.” 

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• Topics
• South Asia
• Southeast Asia
• GPs
• Venture
• Financials
• Technology
• Apis Partners