The fourth mezzanine fund’s ultimate close was announced by Vantage Capital, the largest mezzanine fund manager in Africa. A total of $377 million has been committed from a variety of commercial investors with bases in Europe and the United States as well as a number of development finance institutions (DFIs), including the IFC, BII, SIFEM, DEG, Norfund, Swedfund, Finnfund, and EIB.
Recall that the South African venture capital firm announced the successful first close on its fourth mezzanine fund 19 months ago, with the US $207 million of commitments from commercial investors in Europe and the US as well as development finance institutions (DFIs) like IFC, CDC Group, and SIFEM.
Fund IV has made two investments to date, giving the needed support the tech ecosystem needs. Vantage will continue to offer mid-sized African businesses flexible finance to assist job creation and business expansion, much like its predecessor funds did. Mezzanine debt is particularly well suited to dependable industries with strong development characteristics, such as communications, healthcare, education, real estate, export manufacturing, outsourced services, and specific infrastructure like private power generating.
The managing partner, Warren van der Merwe, stated that Vantage Capital was proud of the ongoing support received from its investors. According to him, when the firm raised Fund I in 2006, it became South Africa’s first independent mezzanine fund. At the time, mezzanine was not generally known outside of South Africa in other parts of Africa.
“Since then, we have taken our mezzanine product across Africa, targeting 14 markets and having invested in 11 to date. Our fundraising success, in such a challenging environment, is a validation of the mezzanine asset class in Africa and of our role as a pioneer in this space over the past 17 years.”
About Vantage Capital
Founded in 2001, Vantage Capital is regarded as Africa’s largest mezzanine fund manager with offices in Johannesburg and Cape Town. The firm invested $19m in African startups between 2001 until 2006 when it secured its first mezzanine fund of $150M. By 2008, 5 South African investments were made through the fund.
The largest and most experienced independent mezzanine financier on the continent, Vantage Capital’s Mezzanine firm has made 33 investments across four funds into 11 African nations since 2006.
A $240 million second mezzanine fund was created in 2012 and invested in a portfolio of 13 African companies. The third mezzanine fund, which was launched in 2015 for $287 million and included 13 additional investments scattered across the continent, came next. Vantage has supported several success stories in a variety of industries throughout the continent over the past 17 years. One such example is Vumatel, a provider of fiber-to-the-home networks in South Africa.
The fact that Vantage has been successful in raising $377 million for its fourth mezzanine fund demonstrates the growing need among mid-sized African corporations for flexible finance options as well as the fact that investors view Vantage as a leader in this market.
“As with previous funds, a substantial portion of the funds have been raised from private sector investors such as insurers, pension funds and endowments who find our contractual yields and equity upside exposure attractive when compared to private equity alternatives. We have also received valuable support from DFI investors, who appreciate the impact that mezzanine can have in growing mid-sized African enterprises,” said van der Merwe.
“Vantage Capital’s mezzanine offering plays an important role in supporting the growth of mid-size businesses that would otherwise struggle to access capital through conventional banking channels”, explains Luc Albinski, executive chairperson.