South African private equity firm Infinite Partners has raised R2.8 billion ($169.3 million) for its second core equity fund, exceeding its R2.5 billion ($151.1 million) target.

Core Equity Fund II was backed entirely by South African institutional investors, including pension funds, insurers, asset managers and banks. The fund will provide growth and replacement capital to established mid-market businesses.

Individual investments are expected to range from R100 million ($6 million) to R500 million ($30.2 million), according to information reported by TechCabal.

Technology-enabled businesses

Infinite Partners is a generalist private equity investor rather than a fund dedicated solely to technology. However, its investment approach includes businesses using technology to expand their markets, improve efficiency and increase access to essential services.

The firm’s first two investments are e4, an enterprise software company, and CYNK, a digital infrastructure business.

e4 serves the banking and property sectors, digitising workflows involved in mortgage origination and property transactions. Edward Pitsi of Infinite Partners said the company’s technology reduced the home-buying process from 96 days to around 40 days. He also said e4’s platform had processed R2.8 trillion ($169.3 billion) in mortgages since its inception.

Those figures and the reported impact of e4’s technology were attributed to Pitsi and were not independently verified in the source material.

CYNK develops and owns fibre assets. Its network reaches more than 667,000 South African households, particularly in underserved communities and townships, according to CYNK and Pitsi. Pitsi said the infrastructure had created opportunities for small businesses in underserved areas and helped improve the affordability of internet access.

Investment strategy

Pitsi said the firm’s investment decisions consider structural growth drivers, management quality, margins, cash conversion, barriers to entry and the availability of a credible exit strategy.

“Our Infinite Deal investment philosophy has remained the same from day one. We focus on backing quality businesses with identifiable tailwinds, and potential to create sustainable value over time,” Pitsi said.

He described Infinite Partners as a generalist South African mid-market investor with restrictions on committing too much capital to any single sector.

Some of the firm’s earliest backers increased their commitments after seeing its approach take shape through the first two investments, Pitsi said. He added that the firm is exploring opportunities in business services, education, alternative lending and software-as-a-service.

International expansion could form part of the strategy for portfolio companies where appropriate. Infinite Partners also has a nascent operation in the United Kingdom, which extends the potential market for technology developed in South Africa.