Kholo Capital Mezzanine Debt Fund I Achieve First Close At R870m
Kholo Capital Mezzanine Debt Fund I Achieve First Close At R870m. 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 (i.e., South Africa, Botswana, Namibia, Lesotho and Swaziland). These first close commitments have been secured from leading institutional investors including the 27four Black Business Growth Fund, RisCura (on behalf of various clients), the Mineworkers Provident Fund, the National Fund for Municipal Workers and Thuso Partners, and represent a significant milestone in the mezzanine debt fund’s ambitions to reach a target final close of R1,5bn.
Kholo Capital Mezzanine Debt Fund I believe that 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 minimum R25m EBITDA across various growth sectors of the economy, providing access to capital within a preferred range of R50-200m per investment. The benefit of mezzanine debt funding lies not only in the ability to tailor terms like debt servicing requirements, but also it avoids the significant equity dilution which is sometimes the reality when companies try to fund their growth ambitions. Kholo Capital is excited at the opportunity to bring a solution to this part of the market and partner with businesses over a 4–7-year investment period, realising not only commercial returns, but with a focus on achieving more holistic impact.
Zaheer Cassim, founder and Managing Partner at Kholo Capital, said: “Our aim is to invest responsibly, and, in the process, create jobs and sustainable businesses. We will add value by providing strategic and financial support to investee companies including family-owned and black-owned businesses. Our assistance will help these businesses to build much needed capacity and professionalise. We would like to thank all our investors that have supported us to getting to this first close”.
Kholo Capital Mezzanine Debt Fund I is passionate about making investments that actively take social, environmental and economic impact into account and as such 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 key focus on those linked to job creation and climate action. Mokgome Mogoba, founder and Managing Partner at Kholo Capital, added: “We aim to drive social change and economic growth by investing in strategic sectors of the South African economy, on behalf of institutional investors, in order to fund the development of historically disadvantaged communities. Kholo Capital wants to play a key role in addressing the massive challenges of high unemployment, inequality, poverty and low economic growth in South Africa.”
This mission is critically aligned to that of the company’s investors with Rory Ord from 27four Investment Managers adding: “It has been a pleasure to work with the highly experienced and transformed mezzanine debt team at Kholo Capital as they have progressed to their successful first close. 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.”
