Summit Africa, a specialist black-owned and managed impact investment manager and licensed financial services provider, has launched Summit’s Private Equity Fund II (SPEF II) with a $20m (c.R355 million) anchor investment by British International Investment (BII), the UK’s development finance institution and impact investor.

SPEF II intends to raise an additional R400m to R500m from other local and international institutional investors, before commencing with deployment of capital.

SPEF II has a target fund size of R2.5bn.

The Fund’s Investment Lead and Partner, Nthabiseng Thema, said: “The Fund is grateful for the support and commitment received from BII. This anchor investment demonstrates the strength of Summit Africa’s investment platform, our team, our fully integrated ESG and impact strategy, and our ability to work actively with portfolio companies to meet their financial and social impact objectives. This is also a vote of confidence in South Africa and the Southern Africa region as an investment destination, noting the Presidential Investment drive to mobilise R2trn worth of investments in South Africa over the next five years.”

The British High Commissioner to South Africa, Antony Phillipson, said: “I am delighted that BII is making this investment in Summit Africa which will help to drive financial and digital inclusion, diversity, and food security. This is an important example of the growth and investment partnership between South Africa and the UK and our shared aspiration to boost growth through deeper cooperation on trade, investment and economic reform between our two countries, creating economic opportunities for people and communities that urgently need them."

SPEF II will invest in small-to-mid market companies in financial services and ICT sectors to drive financial and digital inclusion, job creation, transformation, and diversity across South Africa and the Southern African region.

The fund will also target food security as an additional investment sector. A third of South Africa’s food resources, which is around 11.1 million tonnes of food, are wasted every year, according to South African Department of Forestry, Fisheries and the Environment, and 68%of the wastage is due to inadequate food processing and packaging, storage and distribution.

It reveals the urgent need to explore more resource-efficient solutions in these areas, to adequately feed South Africa’s population, which is expected to grow by another 4 million people by 2030.

As part of its inclusion targets, at least 15% of the fund is allocated to directly or indirectly address the needs of the low-income population which belongs to Living Standards Measure 1 – 6 in South Africa. 

Najwah Allie-Edries, Head of the Jobs Fund, a National Treasury Initiative which supported Summit Africa’s first private equity fund through the 27four Black Business Growth Fund II, said: “The Jobs Fund is proud to have supported Summit Africa in its mission to raise capital aimed at fostering economic growth and sustainable social impact across South Africa. With an unwavering commitment to transforming the financial landscape, the Jobs Fund recognises the crucial role that diverse investment strategies and inclusive leadership play in addressing the socio-economic challenges faced by our country.” 

SPEF II is eligible to be recognised as a 2X Investment under the 2X Framework, of which BII is a founding member, which advances opportunities for women through quality employment, business leadership, access to finance and products/services that meaningfully support women.

BII’s investment in the Fund also reinforces the DFI’s commitment to increase investment in Black-owned and led business in Africa, who often face challenges in accessing capital compared to other ethnicities in the region. 

Leslie Maasdorp, BII CEO, said: “Working with impact-aligned fund managers like Summit is important to help achieve our goal to deliver development impacts at scale. With its proven track record for the first fund, we are delighted to anchor Summit’s second private equity fund to double down support to SMEs in key sectors that improve the livelihoods of people in South Africa and the Southern African region.” 

The new fund aims to extend the significant post-investment value and social impact realised by Summit Africa’s first private equity fund since 2019, where it has: extended R678m in much-needed funding to over 6,200 South African Small, Medium, and Micro-sized Enterprises (SMMEs); provided critical healthcare services to over 31,050 patients specifically in peri-urban, township and rural areas, and provided affordable, quality tertiary education and training to approximately 2,000 learners annually, majority of whom are previously disadvantaged individuals.