Vantage Capital has announced the final close on its fourth mezzanine fund with $377m of commitments secured from a mix of European and US-based commercial investors, as well as a host of development finance institutions (DFIs) that include IFC, BII, SIFEM, DEG, Norfund, Swedfund, Finnfund and EIB.

Warren van der Merwe, Managing Partner, said: “Vantage is proud of the continued support received from our investors. We were the first independent mezzanine fund in South Africa when we raised Fund I in 2006. Mezzanine was not well known in South Africa at that time, let alone in the rest of Africa. Since then, we have taken our mezzanine product across Africa, targeting 14 markets and having invested in 11 to date.”

“Our fundraising success, in such a challenging environment, is a validation of the mezzanine asset class in Africa and of our role as a pioneer in this space over the past 17 years. As with previous funds, a substantial portion of the funds have been raised from private sector investors such as insurers, pension funds and endowments who find our contractual yields and equity upside exposure attractive when compared to private equity alternatives. We have also received valuable support from DFI investors, who appreciate the impact that mezzanine can have in growing mid-sized African enterprises.” 

As with its predecessor funds, Vantage will continue to provide mid-sized African businesses with flexible capital to drive business expansion and support job creation.

In particular, mezzanine debt is well-suited to robust sectors with strong growth dynamics, including telecoms, healthcare, education, real estate, export manufacturing, outsourced services and selective infrastructure such as private power generation. Fund IV has made two investments to date, providing early-stage construction funding to Seaton Estates in South Africa for a residential development on the KwaZulu Natal coast, and backing a prominent Egyptian private equity firm, Compass Capital, to acquire a portfolio of A grade office buildings in Cairo as they build a diversified portfolio of income-generating real estate assets.

Over the past 17 years, Vantage has funded a number of success stories across a range of sectors around the continent, including Vumatel, a fibre-to-the-home network operator in South Africa, and Pétro Ivoire, a downstream oil & gas distributor in Côte d’Ivoire. 

Vantage’s support to its portfolio extends beyond funding, explained Luc Albinski, Executive Chairman.

The fund manager plays an active role in guiding strategic direction, building robust governance structures, and supporting its companies to improve their environmental and social impact. These interventions help to set the companies firmly on the path to becoming regional leaders and serving as role models to their African peers.

As Vantage deploys its fourth mezzanine fund, this will remain an area of focus and pride for the firm, said Albinski.

“Vantage Capital’s mezzanine offering plays an important role in supporting the growth of mid-size businesses that would otherwise struggle to access capital through conventional banking channels”, he said.

“Vantage’s non-dilutive funding enables business owners to retain control and hold on to their equity, while at the same time accessing the capital needed to realise their full potential. This, in turn, plays an important role in driving economic growth, job creation and improved prosperity,” Albinski concluded.