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Kholo Capital Mezzanine Debt Fund I, a South African mezzanine debt fund, has secured R870 million in commitments for long-term mezzanine debt investment in support of growth, job creation, and the advancement of transformation within mid-market companies operating in Southern Africa.
The fund will invest in companies generating a minimum of R25 million EBITDA across various growth sectors of the economy, providing access to capital within a preferred range of R50 to R200 million per investment.
Zaheer Cassim, founder and managing partner at Kholo Capital, believes that mezzanine debt funding is attractive because it provides companies with a tailored, more flexible solution in support of their growth needs.
Mezzanine debt funding sits between senior debt and equity in the capital structure of a company, avoiding significant equity dilution which is sometimes the reality when companies try to fund their growth ambitions. The fund aims to partner with businesses over a four- to seven-year investment period, realising 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 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, aims 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.
He believes that Kholo Capital can play a key role in addressing the massive challenges of high unemployment, inequality, poverty and low economic growth in South Africa.
These sentiments were echoed by the fund’s investors, who are proud to be backing a team of experienced and transformed mezzanine debt professionals in their dual goals of strong investor returns and positive impact.
Rory Ord from 27four Investment Managers stated that this type of growth capital is sorely needed in South Africa and they are proud to back the Kholo Capital team in their efforts. Frans Phakgadi from Mineworkers Provident Fund added that they 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, believes that Kholo Capital Mezzanine Debt Fund I is aligned with the vision of the National Fund for Municipal Workers to contribute substantially to high-impact areas that address many socio-economic issues confronting Southern Africa, particularly South Africa. They 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.