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Vantage Capital’s fourth mezzanine fund closes at $377 million

07 Feb 2023, 11:21 am
Financial Nigeria
Vantage Capital’s fourth mezzanine fund closes at $377 million

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Since 2006, Vantage Capital’s Mezzanine division has made 33 investments across four funds into 11 African countries.

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Vantage Capital, a leading African mezzanine fund manager, announced on Monday the successful final close on its fourth mezzanine fund. A total of $377 million of commitments was secured from a mix of European and US-based commercial investors, as well as a host of development finance institutions (DFIs), including IFC, BII, SIFEM, DEG, Norfund, Swedfund, Finnfund, and EIB.

According to Vantage Capital, it will continue to provide mid-sized African businesses with flexible capital to drive business expansion and support job creation. A statement by the company said 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.

Its 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.

Mezzanine financing is a hybrid of debt and equity financing and provides business loan that offers repayment terms adapted to a company's cash flows.

“Vantage is proud of the continued support received from our investors,” said Warren van der Merwe, Managing Partner, Vantage Capital. “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.”

He said Vantage’s fundraising success, in such a challenging environment, is a validation of the mezzanine asset class in Africa and of the company’s role as a pioneer in this space over the past 17 years.

Since 2006, Vantage Capital’s Mezzanine division has made 33 investments across four funds into 11 African countries, making it the largest and most experienced independent mezzanine funder on the continent, the company said. Its inaugural mezzanine fund was raised in 2006, with $150 million invested into five South African companies. In 2012, its second mezzanine fund of $240 million was raised, investing into a portfolio of 13 companies across Africa. This was followed by its third mezzanine fund of $287 million raised in 2015, with a further 13 investments spread across the continent.

Vantage said its success in now raising $377 million for its fourth mezzanine fund is a validation of the growing demand for flexible funding solutions amongst mid-sized African corporates, as well as a recognition by investors that Vantage is a leader in this niche.

According to Vantage Capital, support to its portfolio extends beyond funding. 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.

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