Kholo Capital Mezzanine Debt Fund I has secured R870m in commitments for long-term mezzanine debt investment in support of growth, job creation, and advancement of transformation within mid-market companies with operations in Southern Africa. These first close commitments have been secured from leading institutional investors, including the 27four Black Business Growth Fund, RisCura, the Mineworkers Provident Fund, the National Fund for Municipal Workers, and Thuso Partners. Kholo Capital aims to reach a target final close of R1,5bn.
The mezzanine debt funding approach, being a subordinated loan position that sits between senior debt and equity in the capital structure of a company, is attractive because it provides companies with a tailored, more flexible solution in support of their growth needs. Kholo Capital’s selection criteria means it will focus on investing in companies generating a minimum R25m EBITDA across various growth sectors of the economy, providing access to capital within a preferred range of R50-200m per investment. As Kholo Capital, they aim to partner with businesses over a 4–7-year investment period, realizing not only commercial returns but with a focus on achieving more holistic impact.
Kholo Capital Mezzanine Debt Fund I is passionate about making investments that actively take social, environmental, and economic impact into account. It will provide financing, with a focus on growth capital, into sectors of the southern African economy with high social impact, including social housing, renewable energy, healthcare, education, telecommunications, and infrastructure. The mezzanine debt fund will use the United Nation’s 17 Sustainable Development Goals as guiding principles, with a key focus on those linked to job creation and climate action.
Kholo Capital’s mission aligns with that of its investors, as stated by Rory Ord from 27four Investment Managers, “This type of growth capital is sorely needed in South Africa, and we are proud to back the Kholo Capital team in their dual goals of strong investor returns and positive impact.” Principal Officer Frans Phakgadi from Mineworkers Provident Fund added, “We are excited to support Kholo Capital Mezzanine Debt Fund I to invest directly in the local economy for growth and job creation, which are sorely needed.”
Leslie Ndawana, the Principal Executive Officer at the National Fund for Municipal Workers, stated, “We are proud to be an investor alongside Kholo Capital and are looking forward to a long and rewarding relationship with them.” With a strong pipeline of opportunities, Kholo Mezzanine Debt Fund I is well positioned to advance its investment objectives, making a substantial impact in support of the real economy.
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