Futuregrowth Asset Management, a South African fixed-income money manager with R193-billion of assets, is raising a fund to invest in startups with a strong developmental impact.

The company aims to raise as much as 600 million rand for the Futuregrowth High Growth Development Equity Fund -- a closed-ended, limited-life fund -- by the end of the year, according to a statement from Futuregrowth. For the money manager’s Cape Town-based Chief Investment Officer Andrew Canter, South Africa’s second-largest city offers ample opportunities for investment.

“There are some real hives of activity going on out there,” Canter said in an interview in Bloomberg’s Cape Town office, adding that he has seen lot of business action while cycling 30 kilometers (18.6 miles) to work and back. Futuregrowth has invested in companies such as financier of small firms, Retail Capital, which Canter has observed while on his ride to work.

Futuregrowth joins investors such as Naspers Ltd. in backing startups, which are seeing a revival in Africa’s most-industrialized economy. Early-stage firms attracted more than 12 billion rand in venture capital last year, a ninefold increase since 2016. To tap the opportunity, Naspers set up Naspers Foundry, which invests in early-stage firms.

Futuregrowth, backed by Old Mutual, has a 16-year-old Development Equity Fund with 3.4 billion rand under management that has included about 10 early-stage investments and “can see it works,” Canter said. The fund that’s being launched has a broad mandate that covers infrastructure, social services, clean power, agriculture and regional development.

The specialist money manager gained attention in 2016, during a period of alleged rife corruption under former President Jacob Zuma, when it stopped lending money to about 20 of South Africa’s largest State companies, known as SOEs, because of concerns over how they were being run. Futuregrowth lifted the restriction after it recognized adequate oversight and governance.

The country has moved on and is on the right path now, Canter, who grew up in the US and moved to South Africa three decades ago, said. He expects his nascent startup fund to grow.

“Don’t promise the earth, do what you can do, deliver it,” he said. “That’s why my infrastructure fund has been going since 1995 -- just keep doing it properly in a sustainable, appropriate way. It’s not a get-rich quick scheme, it’s a sustainable business.”

Futuregrowth’s DEF has investments in companies including Yoco, which provides handheld card payment systems, and participated in a Series B funding round for South African fintech startup Ozow, joining Tencent Holdings, and agricultural technology firm Inseco, where it led a funding round. It recently sold one of its first early-stage investments, CashConnect, generating a 48% internal rate of return.

The High Growth fund will have a four- to five-year draw period and five- to six-year payback period, according to the company.

“What’s exciting for the rest of my career is establishing this early stage fund and doing those deals, dealing with those entrepreneurs is much more inspiring than dealing with malfunctioning SOEs,” Canter said.