Vantage Capital, Africa’s largest mezzanine fund manager, has provided a debenture facility of N80m ($5.52m) to United Africa Group (UAG), an established hospitality and property-owning group in Namibia.

David Kornik, Associate Partner at Vantage Capital, said: “We always look for our funding to facilitate expansion and economic development.”

“In this investment we are therefore proud to be supporting a local business group, in a project that will have a significantly positive impact on tourism growth as well as on the development of Windhoek’s city centre,” he said.

The funding is being used to support the group’s equity contribution for the construction of a new Hilton Garden Inn, a 181-key three-star hotel to be located in the heart of the Windhoek city centre on Freedom Square, adjacent to UAG’s existing five-star Hilton Windhoek Hotel.

UAG was founded in 1992 by Haddis Tilahun and was later joined by his wife, Dr. Martha Namundjebo-Tilahun.

It has since grown rapidly to become one of the largest property-owning and hospitality groups in Namibia, with 10 existing hotels in its portfolio (nine operated by Protea and one by Hilton) as well as commercial real estate in Windhoek covering over 12,000 m2of office space and in excess of 2,500 m2 of retail space.

Growing tourism demand in Namibia has been a key driver behind the hotel construction project.

Tourist arrivals to Namibia have shown consistent growth over the past five years and the trend is expected to continue going forward, with tourist arrivals projected to double over the next ten years.

The Namibian Government has in fact identified tourism as one of the economy’s key growth sectors over the next decade.

The new hotel will be equipped with all the amenities expected of a world-class business and leisure hotel including a pool, sundeck, gym and roof garden.

The proximity to the existing Hilton Windhoek Hotel will also allow for the sharing of services including conference facilities.

The Hilton Garden Inn forms part of the broader 2.4 hectare Freedom Square development that is being undertaken by UAG.

Willem Mouton, CEO of UAG, said: “We are pleased to bring Vantage on board as an experienced African investor who shares our views on the exciting prospects for Namibia’s tourism and hospitality sector. We look forward to a mutually rewarding partnership in the coming years.”

Warren van der Merwe, Chief Operating Officer of Vantage Capital, said this transaction marks first investment in Namibia and Vantage’s 21st mezzanine transaction overall.

“UAG has built up a quality portfolio of hospitality and commercial property assets under the strong leadership of Haddis and Martha Tilahun and we are pleased to provide them with financial backing as they further entrench themselves as a leader in the local hospitality sector,” he said.

The investment is Vantage Capital’s third transaction in Fund III, which is targeting a final close of $260m(R4 billion), and has a 60% allocation to countries outside South Africa.

After supporting the Servest buyout last year, Vantage’s Fund III recently concluded a $20m investment in a Nigerian property group, Landmark.

The Fund is expecting to close its fourth transaction during the first half of 2016 for an investment of over $17m (R250m).