Q1 2020 - (released May 2020)
SA's quarterly Private Equity & Venture Capital magazine
Vantage Capital, Africa’s largest mezzanine debt fund manager, announced that it has fully exited its investment in Vumatel, the largest fibre-to-the-home network provider in South Africa. The company was established in October 2014 by Niel Schoeman and Johan Pretorius, industry veterans who had previously started up the Birchman Group and Conduct Telecom.
At the time of Vantage’s investment in 2016, Vumatel had deployed its open-access fibre optic network across fourteen suburbs in Johannesburg – passing 16,000 homes – and had secured around 4,000 subscribers. It had also received an equity investment from Investec Equity Partners.
Last year, CIVH – majority-owned by Remgro – acquired full ownership of Vumatel after initially securing a 34.9% stake in 2018. Vantage’s investors were beneficiaries of this transaction from both ends as Vantage had, in a separate transaction, provided New GX (a black-owned and controlled investor) with mezzanine funding to part-finance their fibre-related assets, including local manufacturing capacity.
Vantage exited the New GX transaction in 2018 and in early May 2020, Vantage’s mezzanine facility was refinanced by Vumatel after it secured substantial funding from a consortium of South African banks.
To date, Vantage has successfully exited twelve investments across its three generations of mezzanine debt funds, generating cumulative proceeds of R4.2bn ($360m) and x-money of 2.3x (1.8x in dollars).
Bloomberg reports that Capitalworks Investment Partners plans to invest R5bn of newly raised cash in mid-sized SA companies hit by a shrinking local economy and the coronavirus pandemic.
The firm raised 25% more than planned for its Private Equity Fund III from Morgan Stanley’s Alternative Investments Partners unit, institutional investors and wealthy families, Capitalworks founder Chad Smart told Bloomberg. The company is seeking businesses with enterprise values from R250m - R4bn in industries such as financial services, food, and health.
“There are high-quality businesses that are unduly punished by the virus that would usually use a crisis to gain market share,” he said in an interview. “With the coronavirus, a number of them don’t have turnover coming in; it’s an unusual situation. The liquidity and growth-capital need means that you can find the best companies to invest in.”