African backer of tech unicorns eyes AI in healthcare deals

Chronos Capital, an early backer of emerging market unicorns Tyme Group and Optasia, is looking to invest in companies deploying artificial intelligence in healthcare as it seeks to capitalise on a technology that’s expected to transform the medical industry.

“AI in healthcare is going to have the biggest impact on humanity,” Roger Grobler, a partner at the investment firm said in an interview. “AI in healthcare is probably where fintech in financial services was 30 years ago. All the upside is still to be made.”

AI is developed by processing and learning from vast swathes of data, which in healthcare, for example, may enable it summarise and recognise patterns in records, interpret test results and diagnose illnesses. Its potential to address inefficiencies in the global health-care industry, lower costs and democratize access to medical treatment is drawing interest around the world, including from Google parent Alphabet and M42, Abu Dhabi’s state-backed investment firm.

In emerging markets, where Chronos favors investing, scaling and deploying the tech

nology in places with few doctors or nurses, or in mobile clinics in under-developed regions could help to deliver high quality services at lower costs and improve patient outcomes, said Grobler. Chronos also sees potential in edutech and fintech, he said.

Billionaire Investment Partner

Chronos, run by former executives of top South African finance firms including FirstRand’s First National Bank, OUTsurance Group and Hollard Group, has $467 million (R8.3 billion) in assets under management, excluding telecommunications company rain.

Founders Grobler, Nic Kohler, Willem Roos and Michael Jordaan have been investing as a team since 2016 and favour data-driven decision making through Chronos. The firm seeks long-term investment opportunities in highly scalable businesses with AI potential in their value chain and typically makes no more than two investments a year so it can work closely with the companies it backs, Grobler said. It usually invests alongside partners such as billionaire Patrice Motsepe’s African Rainbow Capital.

Chronos was an early investor in the African Rainbow Capital-controlled Tyme Bank, a digital lender with operations in South Africa, the Philippines and Vietnam. The bank passed the $1 billion valuation threshold that marks a unicorn in November after a capital raise that included investment from Latin America’s most valuable financial company, Nu Holdings Ltd.

In March, Chronos along with African Rainbow Capital, Standard Bank Group and a few South African family offices, bought an additional 13% stake in Dubai-based fintech Optasia, making the consortium the biggest shareholder in the company. Optasia, which offers services such as micro-loans in 40 countries, garnered an enterprise value of $1 billion as a result of the transaction.

South Africa’s rain, which started as a data-only network operator that reduced internet-connection costs for consumers, is another Chronos-backed unicorn. Started by three of the investment firm’s founders, rain has built the country’s largest 5G network in about seven years, according to its website. African Rainbow Capital, one of its shareholders, values the company at more than $1bn.

“We really like audacious business models,” Grobler said, recalling how a top consultancy advised them against rain. “They said to us ‘this is a really bad idea because in every market the top two telcos make lots of money, the third one breaks even, all the others lose money and you’re going to be number six’.” Still, rain’s founders continued, knowing their technology would leapfrog that of the time, he said.

BLOOMBERG