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SA’s Hepstar secures R30m investment

 

Digital insurance distributor Hepstar has secured $2 million (R30 million) in growth equity funding. The funding was led by UK-based technology investor Amadeus Capital Partners. The Amadeus’ investment into Hepstar is provided for by their Digital Prosperity Fund, which is backed by the MTN Group. By Gugu Lourie


The growth capital will support Hepstar’s global expansion plan and accelerate its technology development.

The Cape Town based firm, which was founded by Stephan Ekbergh in 2013 – to address the need for e-commerce companies in general, airlines and travel companies in particular, to maximize revenue from ancillaries – is targeting the $60 billion global airline ancillary industry.

As part of the transaction, the new investors will own a minority stake in Hepstar.

Ekbergh, with his management team, will continue to own a majority shareholding.

Andrea Traversone, Investment Partner at Amadeus Capital Partners, has joined Hepstarr’s board of directors.

Asked why the executives of the business were excited with this deal with Amadeus, Claudia Snyman, Hepstar’s chief operating officer, said: “The accelerated growth and innovation this investment will allow Hepstar”.

The rationale for the transaction is “to accelerate Hepstar’s proprietary technology advancements and to grow our global footprint,” Snyman told TechFinancials.co.za

Over the last year, Hepstar has grown its presence into the Middle East, Europe, Australia and parts of Africa.

Hepstar’s clients include CarTrawler, South African Airways, ClickBus (including Neredennereye.com), IATI, Flightsite and Travelstart.

Hepstar’s rapid growth in such a short period of time is due to strategic partnerships with some of the leading Global Distribution Systems, as well as insurance companies including Mapfre, Regent, Al Sagr and Orient Sigorta.

“The global airline ancillary opportunity is around US$60 billion. We can help our partners make up to 30% of their net revenues from insurance ancillaries,” said Hepstar’s chief financial officer, Brett Dyason.

Last month, Travelstart secured $40 million (R645 million) in funding from Amadeus and mobile phone group MTN. The capital gives Travelstart additional resources to expand quickly and strategically into new markets.

“Amadeus Capital is excited to be involved in Hepstar,” said Traversone.

 

“They are solving a real problem regarding insurance distribution during a time when ancillary revenue is becoming increasingly important for e-commerce companies.

 

“Given the prowess they have demonstrated in this niche we expect they will be a leading supplier in this market in the near future.”

Hepstar is a tech firm that specialises in the distribution of travel insurance via third party websites. It designs products that are suitable for today’s travellers. It sells the products through a proprietary distribution platform, which increases the uptake and maximises partners’ revenues.

Traditional customers include airlines, online travel agencies, travel technology companies and bus companies.

 

Hepstar Management Team
Hepstar Management team: From left to right: Stephen Booysen, CTO, Heinrich Brand, Head of Legal and Compliance, Claudia Snyman, COO, Stephan Ekbergh, Founder and CEO, Brett Dyason, CFO

The firm employs 14 people who are based in Cape Town and another two staff members are based in the Istanbul office, in Turkey.

“Hepstar has grown organically to date and we are now anticipating growth of 150% in 2016. This investment will allow us to focus on innovation, sales and local talent acquisition,” said Dyason.

Amadeus’ fund assists growth companies to develop online and mobile applications in emerging markets such as the Middle East, Asia, Latin America and the rest of Africa.

This made Hepstar a prime candidate because it focuses on expanding in Africa and the Middle East, while also developing a footprint in Latin America.

Snyman said the plan for Hepstar was to roll-out its technology into markets, where it has customers (based on their needs and expansion plan).

“Being a technology company allows us to grow globally without having to open up offices in the respective key expansion markets. We will be growing through acquisition. Our technology stack which is hosted in the cloud allows us to scale incredibly fast to support these global plans.”

Asked how Hepstar was differentiating itself from competitors, Snyman said: “Travel insurance is the smallest category of ancillaries and it is cumbersome to address and implement properly on a global basis. Hepstar provides a plug-and-play solution, which greatly improves attachment rates.”

Hepstar is unique in that its business model is not backed by a specific insurer, re-insurer or brokerage.

“We are a pure tech solutions provider that is agnostic from an insurance perspective,” explains Snyman.

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