South Africa-based private equity investor Vantage Capital has received a $25million commitment to its Vantage Capital Fund II (VCF II) from the African Development Bank (AfDB).
VCF II is targeting $250million at final close and will provide mezzanine financing, which combines debt and equity, to companies across Africa. The fund is the first private equity vehicle to de domiciled in Botswana, and is expected to boost the newly launched Botswana International Financial Service Center (BIFSC).
VCF II expects to allocate 45% of its portfolio to the Southern Africa Development Community (SADC) region, 30% to North Africa and with the remainder split between East and West Africa. Vantage expects its investments to mobilize about $735 million in capital to mid-markets companies. This is also as mezzanine capital is frequently used to support leveraged transactions. The investor also expects its deals to bring in $145 million in government revenues.
Vantage expects the fund to help grow mezzanine financing across Africa, with Mezzanine assets currently representing less than 2% of African private equity funds, compared to the 10% global average, according to AfDB. The developmental investor expects the mezzanine financing market to reach $1.6billion by 2016. Mezzanine financing can attract interest rates of up to 30%, according to Vantage.
Headquartered in Johannesburg, Vantage Capital primarily focuses on private equity deal making. Founded in 2001, the manager has invested over $188million (R1.5 billion), with six portfolios already exited. Vantage is headed by Mutle Mogase [pictured], as chairman.