Kleoss Capital, a South African private equity firm, has bought an undisclosed stake in one of the largest debt counselling firms in South Africa, Debt Rescue.

Debt counselling was formally introduced by the National Credit Act to help over-indebted consumers.

The goal of debt counselling is to develop a repayment plan, which is affordable as well as acceptable to all credit providers.

The process is intended to assist over-indebted consumers struggling with debt, through budget advice, negotiation with credit providers for reduced payments and restructuring of debts.

Neil Roets, Debt Rescue CEO, said their primary reason for selling a share of the business to Kleoss Capital was that Debt Rescue had reached the point where it was ready to spread its wings to bigger and better things.

“We have twice been voted the best debt counselling firm in South Africa by both the public and by the major role players in our industry which included the major banks,” he said.

Roets said that after almost a year of negotiations, Kleoss Capital decided to come on board bringing with them a wealth of expertise and experience in the private equity field.

“We are delighted to have Kleoss Capital on board. We were impressed by their methodological approach to investing and thoroughness during the due diligence phase. We look forward to the strategic partnership and the invaluable inputs Kleoss Capital will be able to make in our already strong management team,” he said.

Roets said Kleoss Capital approached them because they considered Debt Rescue a leader in their field and was of the view that the company offered significant growth potential.

Kleoss Capital, a R1.2bn growth equity fund was founded in 2014 by Hale Matsipa together with Andile Keta and private equity practitioner, Zain Laher.

The firm seeks to invest in South African businesses with exposure to the rest of the African continent.

“We look at a wide range of attributes such as the value of the companies, how much capital they need and what they plan to do with it to grow the business. We look at their transformation credentials and see how best we can help them to add value and ultimately sell it for a healthy profit,” said Matsipa.

Commenting on the Debt Rescue deal, Matsipa said that Kleoss will work closely with the management team on a value-add basis.

“We believe Debt Rescue has a bright future and is ready for the next phase of its corporate life where we see the business growing to generate solid returns for our investors. We believe that in Debt Rescue we have a solid platform for improving the lives of the millions of over indebted South Africans,” he said.