Fund manager targets AI firms in SA

Private equity investment firm Ethos has launched a new fund, targeting R1 billion that will invest in artificial intelligence (AI) companies in South Africa.

Ethos said it has already completed a first close valued at R600 million and concluded two investments – in Channel VAS and Vertice MedTech Group.

Known as Ethos AI Fund I, it has already raised investments from Ethos Capital and Standard Bank, it said.

Channel VAS is a fintech player that “deploys algorithmic decision-making technology”, while Vertice seeks to disrupt the medical technology value chain by “leveraging AI to enable smarter decision making”.

The fund has been established in partnership with Nic Kohler and Roger Grobler, both former insurance industry chief executives with extensive experience in actuarial science.

“This fund will co-invest alongside other Ethos-managed funds, originate proprietary investments and is expected to generate differentiated value for our investors by helping our portfolio companies to navigate and benefit from artificial intelligence,” said Ethos chief executive Stuart MacKenzie in a statement.

“The fund’s aim is to identify and invest in businesses which we believe will benefit disproportionately from artificial intelligence – specifically algorithmic decision making,” he said.

“These algorithms typically help companies make high-frequency decisions in multiple places along the value chain.

“As these decisions are not ideally suited to human capabilities – typically due to computational complexity and volume of data utilised – the use of algorithms releases intellectual capacity, allowing people to focus on other rewarding areas of work, such as creativity, relationships, strategy or communication.”

Ethos – historically known for its large buyout funds – has been successfully attracting capital to a number of specialist fund offerings, raising about R4.5 billion in the past 24 months from institutional and development investors: R2.5 billion for Ethos Mid Market Fund I; over $100 million in the first close of Ethos Mezzanine Partners 3; and R600-million in first-close commitments to AI Fund I. Originally published on TechCentral.

The fund’s aim is to identify and invest in businesses we believe will benefit from AI. Stuart MacKenzie Ethos chief executive