Investec Asset Management has recently invested in Intelligent Debt Management, South Africa’s leading and largest consumer debt management company, via its Africa Frontier Private Equity Fund.

The financial details of the transaction were not disclosed.

Gerben Dijkstra, Principal at Investec Africa Frontier Private Equity Fund, said the rationale behind this investment in IDM is threefold.

“First, we see a strong management team looking to further grow and professionalize the business; second, they are a dominant and leading player in a fragmented market undergoing formalization, and finally, they have a history of solid operational and financial performance,” he told Africa Global Funds.

“This is set in the context of a favorable industry background, where we see a compelling market opportunity due to significant growth in an underpenetrated market. There are in excess of 10 million SA consumers with impaired credit records of whom a very small percentage are undergoing debt counselling,” he added.

Founded in 2004, Intelligent Debt Management (IDM Group) has helped over 35,000 clients manage, consolidate and restructure their debts.

Under the IDM umbrella lies four companies; BondBusters, InsuranceBusters, DebtBusters and Consumer Debt Help.

The company has enjoyed significant growth since inception, and increasing market demand resulting from a tougher domestic credit environment is expected to drive further growth.

In providing debt counselling, IDM also plays an important role in the financial education of some of the country’s neediest consumers by offering true credit rehabilitation rather than temporary financial relief.

Its Cape Town-based centralized infrastructure with more than 350 qualified employees, serves clients across all of South Africa, delivering its full range of award-winning debt relief services, insurance and financial planning.

Dijkstra said that the tightening of SA credit markets and slower growth in South Africa will provide further support [to IDM Group], coupled with a supportive regulatory environment.

“For example the National Credit Act (NCA) was established to protect consumers and includes process for debt counselling, and the Debt Counselling Rules System (supported by the regulator and the credit providers) supports the formalization of the industry allowing an acceleration of the debt counselling industry,” he said.

Investec Asset Management established an African private equity capability in 2008.

The Private Equity strategy focuses on growth capital and buyout investments in established mid-market and larger companies in Africa, with the objective of supporting the creation of local or regional champions in their respective industries.