Kholo Capital Mezzanine Debt Fund I, under the management of Kholo Capital, has successfully reached its final close with commitments totaling ZAR 1.4 billion (approximately $76.1 million). This fund is dedicated to making long-term mezzanine debt investments in small and medium-sized enterprises (SMEs) throughout Southern Africa.
The fund aims to provide essential growth capital, Black Economic Empowerment (BEE) financing, and acquisition funding across a diverse range of sectors within the Southern African economy. These sectors include social housing, healthcare, education, renewable energy, food, information and communication technology (ICT), financial technology, and infrastructure.
Kholo Capital has established specific investment criteria, focusing on SMEs that generate a minimum of ZAR 25 million (around $1.4 million) in earnings before interest, taxes, depreciation, and amortization (EBITDA). The fund prefers to invest between ZAR 70 million (approximately $3.8 million) and ZAR 200 million (about $10.9 million) per investment.
Mokgome Mogoba, the founder and managing partner of Kholo Capital, expressed optimism about the South African economy and its future prospects, stating;
We are very bullish about South Africa, the South African economy, and the future prospects of this beautiful country and the surrounding region. We are excited about the opportunity to bring creative funding solutions to the Southern African market and to establish long-term sustainable partnerships with businesses over a four to seven-year investment horizon.
Zaheer Cassim, also a founder and managing partner at Kholo Capital, emphasized the advantages of mezzanine debt funding, noting that it is inherently non-dilutive. This makes it an appealing financing option for family-owned businesses, BEE companies, or any enterprise seeking to raise capital while retaining equity. He pointed out that as banks become increasingly risk-averse due to regulatory pressures, lending to SMEs has diminished, thereby creating a significant opportunity for flexible mezzanine debt structures. Cassim expressed gratitude for the support from investors, acknowledging their recognition of the opportunity presented by this funding model.
