Kholo Capital Mezzanine Debt Fund 1 has obtained financing totaling $47.62 million (R870 million) for long-term mezzanine finance investment to assist expansion, job creation, and the advancement of transformation within mid-market businesses with operations in Southern Africa. Leading institutional investors, such as the National Fund for Municipal Workers, RisCura, the Mineworkers Provident Fund, the 27four Black Enterprise Development Fund, and Thuso Partners, have acquired these first close commitments. The final closure target of R1.5 billion is what Kholo Capital is aiming to achieve.
The mezzanine debt funding strategy, which is a subordinated loan position that lies between senior debt and equity in a company’s capital structure, is appealing because it offers businesses a more specialized, adaptable solution to meet their growth objectives. According to Kholo Capital’s selection criteria, it would prioritize investing in businesses that produce at least R25 million in EBITDA across a variety of economic growth sectors, offering access to cash within a preferred range of R50-200 million per investment. At Kholo Capital, they want to work with companies over a 4–7-year timeframe, reaping both financial gains and an emphasis on making a more comprehensive impact.
The goal of the project is to actively consider the social, environmental, and economic effects of its investments. For the southern African economy’s high-impact social sectors, such as social housing, renewable energy, healthcare, education, telecommunications, and infrastructure, it will provide finance with an emphasis on growth capital.
The mezzanine debt fund will use the United Nations’ 17 Sustainable Development Goals as guiding principles, with a key focus on those linked to job creation and climate action.
About Kholo Capital
Kholo Capital is a fund management company with a majority black ownership and management. Former Vantage Capital partners Mokgome Mogoba and Zaheer Cassim founded the company. They both continue to serve as Vantage Capital non-executive directors.
The management group’s combined credit and investment experience exceeds 60 years, and they have extensive knowledge of senior loan, mezzanine financing, and private equity. The team has a proven track record in the credit and investment sectors, having invested more than R57 billion in capital in more than 110 transactions throughout more than 12 African nations.
A team that has been working together for the past 15 years is responsible for managing Kholo Capital.
Zaheer Cassim, founder and managing partner at Kholo Capital, noted that the aim of the company remains 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 build much needed capacity and professionalism. We would like to thank all our investors that have supported us in getting to this first close.”
Emphasis on Climate Financing in Africa
In order to implement their nationally determined contributions under the Paris Agreement, Africa will need $2.8 trillion between 2020 and 2030. This is the price that the continent must pay in order to address the most severe effects of climate change and keep warming at 1.5°C. With more organizations and investors taking care of Africa’s financial requirements related to climate change, this funding gap is expected to be filled.
The AfricaGoGreen Fund just raised $47 million for climate-friendly initiatives on the continent during its second fundraising campaign. The funds raised will be used to construct new environmentally friendly facilities, renovate existing ones, and purchase high-efficiency home and office furnishings.
Africa has the chance to learn from its previous mistakes and move ahead to a better type of growth that can help it achieve both its economic and climate goals by choosing a low-carbon, climate-resilient route.
Important aspects of climate development that can be built upon to propel the required sustainability in Africa include energy transitions and associated investments in sustainable infrastructure, investments in climate change adaptation and resilience, and restoration of natural capital (through agriculture, food, and land use practices).