Harith General Partners, a Pan-African investor and developer of infrastructure projects across the continent, has agreed to acquire a significant stake (46%) in Mergence Investment Managers, an institutional fund manager with a strong 19-year track record and capability across both Private and Public markets within SADC.

The transaction is subject to approval by the Competition Commission which is anticipated by year-end, enabling final close of the deal in January 2024.

It will also entail the creation of an independent women-led group to own 5% of Mergence, boosting women’s participation in the infrastructure investment sector, while also further enhancing diversity within Mergence’s management team.

Structuring the women-led group’s shareholding into the transaction is informed by a commitment shared by both entities to the transformational imperatives of our society and the financial services sector, as well as the recognition of the importance of diversity and inclusivity in our economy. 

“Harith’s acquisition of a controlling stake in Mergence will have a force-multiplier effect on the unique strengths, expertise and experience that both these formidable financial sector players have in their own right,” said Harith CEO Sipho Makhubela.

“Our shared commitment to, and belief in the African continent’s ability to harness capital to unlock value for both investors and societal stakeholders is a particularly pronounced feature of our partnership. It’s that conviction that will stand us in good stead as we seek to build a formidable financial services participant that has diversified public and private market capabilities, ability to leverage synergies and optimize efficiencies,” he added.

Founded in 2006, Harith is a South African based, Pan-African Investor in, and developer of infrastructure assets across the African continent, managing circa R22bn of assets through the two funds it manages, namely PAIDF I and PAIDF II. 

The assets managed by Harith are quality, market-leading assets with significant, long term growth potential.

Over the past 16 years, Harith has established a successful track-record of creating value for its investors in core infrastructure sectors, namely energy, information and communications technology (ICT), water and sanitation, and transport.

Mergence, founded by Mr. Masimo Magerman, is a majority Black-owned institutional fund manager with a strong 19 year track record and capability across both Private and Public markets within SADC.

The Company offers a range of investment management services to institutional clients, including pension funds and insurance companies, and has a geographical footprint that extends to Lesotho and Namibia.

Mergence is a prominent asset management firm with R37bn in managed assets and targeting to diversify into investments in clean energy, water, digital infrastructure, financial inclusion, food security and social infrastructure.

The combined expertise and collaborative benefits will facilitate a wider range of private market offerings, including unlisted debt and equity products. Synergies between Harith and Mergence span private market investment across sectors that include energy, ICT, transport, healthcare, water & sanitation and disruptive businesses.

The shared strategic objective underpinning the acquisition transaction is to build Mergence as a formidable, black-owned, yet diversified company that becomes an African financial services champion in both the public and private markets.

The acquisition also fits in with Harith’s new strategic course, as it presents the opportunity to diversify its sectoral focus areas. This aligns well with Harith’s recent strategic pivot away from being anchored on a fund-manager business model to one that will see Harith become a holding company with diversified, directly-owned investments across a range of sectors on the continent and beyond.

Mergence brings to the transaction significant expertise and experience in public markets. As such, Regulation 28 benefits are also anticipated, enabling diversification of retirement funds’ portfolio and risk management, increased liquidity and ESG factors, as well as compliance with various African regulatory frameworks.

Sholto Dolamo, MD of Mergence Investment Managers, said: “Infrastructure investment has been singled out by government as a catalyst for economic growth. This consolidation leverages Mergence’s footprint for expanded reach and new investment opportunities.”

“Notably, we bring to the table experience in water investment, being the only investment manager with a stake via a public-private partnership in the only two privately-held water concessions in South Africa,” he said.