Experienced fund managers, based close to their portfolio companies, adding real value
Sarona primarily partners with locally-based fund managers investing in frontier and emerging markets. We currently do not invest in funds focusing exclusively on China and Russia. While we will consider first time funds, it is important that the fund managers have demonstrated their ability to add both strategic and operational value to the companies they invest in. We prefer managers who grow companies’ top and bottom line and do not rely on financial engineering and multiple expansion
Focused on growth-stage small and mid-market companies
Our underlying fund managers typically look for opportunities in small and medium enterprises, post-revenue and post-profit with an enterprise value below $150mm. We believe this segment represents a better risk-return profile with less competition, more opportunities, lower entry multiples, more ability to add transformative value and a lower risk of government intervention.
Dedicated to a specific geographic focus
Sarona generally focuses on countries across Africa, Asia, Latin America and Emerging Europe with GNI per capita below $13,000. This includes a universe of approximately 80 countries. It is important for us that the fund manager is locally-based, as we believe this is necessary to navigate the complex realities of the markets we invest in and to add value to portfolio companies. Sarona does not invest in funds that invests more than 25% in developed markets or 50% in Russia and China.
Committed to specific sectors
Sarona targets primarily sectors that are set to benefit from the rapidly rising middle class in Frontier and Emerging Markets. These sectors include healthcare, financial services, consumer goods and services, light manufacturing, transport, professional services, agribusiness, logistics, information and communication technology, services and components for clean and renewable energy, education and the food and beverage industry. As a PRI signatory, we do not invest in funds that aim to invest in mining, extractive or heavy polluting industries. We also do not currently invest in funds focused primarily on venture capital, real estate, infrastructure or agricultural production.
Only funds with a target size larger than $40 million and smaller than $500 million are entered into our active pipeline.
Sarona seeks to outperform listed markets and generate attractive absolute returns by investing in private equity teams who focus on high value-added investments.
Ethical, social and environmental values
Sarona believes it is possible to deliver top quartile financial returns while creating a positive impact in the communities where we invest. It is important that our partners share these values.