Creation Capital has launched the Creation Yield Fund, a hybrid private credit vehicle that combines privately originated debt investments with a listed note structure on the Cape Town Stock Exchange (CTSE), as the specialist investment manager seeks to channel more institutional capital into South Africa's underserved SME and mid-corporate market.

The fund, which was listed through Creation Capital Investments' existing CTSE-listed debt note programme on 15 July, has a target size of R3 billion and launched with an initial issuance of R300 million.

The first issuance is anchored by a South African pension fund with more than R100 billion in assets under management.

The vehicle is designed to provide institutional investors with exposure to private credit through a listed instrument, while directing capital to businesses that often struggle to secure traditional bank financing.

Creation Capital said the fund addresses a financing gap in South Africa's "missing middle" of SMEs and mid-sized companies.

According to the Q2 2025 Real Economy Bulletin by Trade & Industrial Policy Strategies (TIPS), 51% of bank lending is directed to corporates, compared with 13% to SMEs.

With a minimum investment of R50 million, the listed note is aimed at pension funds, insurers, family offices and high-net-worth investors.

The floating-rate structure is also intended to appeal to fixed-income managers seeking predictable returns linked to the prime lending rate.

“Private credit has become increasingly attractive to investors because it can unlock differentiated yield opportunities in areas of the economy that are often underserved by traditional lenders,” said Kasief Isaacs, Chief Executive Officer of Creation Capital.

“By bringing the fund to market through a listed note structure, Creation Capital enables investors to access private credit exposure through a regulated, exchange-listed instrument,” he said.

Isaacs said the structure also provides benefits for retirement funds under South Africa's Regulation 28 framework, as listed debt instruments have broader allocation capacity than certain unlisted alternative investments.

“Investors can access the return and impact characteristics of private credit while benefiting from the governance and disclosure standards associated with a listed instrument and retaining some of the oversight rights they typically receive in an unlisted fund,” he said.

Creation Capital has invested in more than 470 SMEs over the past eight years, supporting nearly 9,000 jobs across sectors including property development, trade finance and renewable energy.

Earlier this year, the firm invested R75 million in Quest Capital Solutions, an SME-focused non-bank lender serving South Africa's logistics sector. Isaacs said investments of this nature demonstrate how private credit can expand access to finance through specialist lenders while strengthening the broader SME ecosystem.

The fund is structured as a listed, tradeable debt note with a 10-year term, providing investors with contractual six-monthly interest payments and repayment of capital at maturity. According to Creation Capital, the structure is uncommon in South Africa's private credit market and incorporates governance features, including an advisory board, that are more typically associated with unlisted funds.

The note offers six-monthly coupons of prime less 1.5% and is expected to generate a minimum return of prime plus 0.5% over its term. As a floating-rate instrument, its returns are designed to provide protection against rising inflation.

“We believe this pricing achieves a good balance between compensating investors for the underlying illiquid nature of the underlying assets while being attractive to investors who regularly trade notes, bonds and similar instruments,” said Isaacs.

He added that the contractual coupon payments and capital repayment provide greater certainty than many traditional unlisted private credit funds, where distributions are often dependent on available cash flows and manager discretion. To support this structure, the fund will focus on originating loans with regular repayment schedules, typically on a monthly or quarterly basis.

Creation Capital was advised by Webber Wentzel on the fund structure and by Megan Black Attorneys on the note issuance.