Makalani is in the process of raising investment capital for a second mezzanine fund (“Fund II”). Although Fund II is not yet closed, Makalani has, in the interim, received a commitment from its investors to consider funding transactions, on a case by case basis, that provide attractive risk adjusted returns.
The Makalani team has the experience and track record needed to harness the opportunities within the identified markets and funding gaps, as demonstrated in its running of the first fund (being one of the largest standalone funds of its kind in South Africa) and other landmark BEE transactions.
What’s more, the Management Company is black managed and controlled, boosting Makalani’s credibility in the BEE arena with an empowered asset manager both in the form of ownership and management. The management team has substantial experience in the BEE market stemming from various roles as equity participants, as well as the providers of BEE financing to other equity participants. This experience complemented by strong relationships within the BEE market gives Makalani a competitive advantage over other funders.
The team also has well-established networks in both the investment banking and institutional markets, allowing it to benefit from being able to draw support where required, yet remaining independent from any one single organisation.
What Investment Opportunities will Makalani consider?
Makalani Fund II will consider investments that correspond with the following identified opportunities:
- Participation in refinancing opportunities in existing BEE and mezzanine structures, especially in circumstances where traditional lenders such as banks may find themselves constrained in providing mezzanine finance due to regulatory constraints;
Funding existing BEE participants
- Provide funding to existing BEE participants which demonstrate significant net asset value but lack funding to take advantage of further opportunities available to them. This funding could also be used to facilitate the exit of the traditional non-BEE investors who provided initial development finance to BEE participants;
- Facilitate consolidation opportunities by providing BEE players with access to finance, which will enable them to acquire BEE assets from other existing BEE participants in existing structures;
Primary BEE and Mezzanine Opportunities
- Provide funding in traditional primary BEE and mezzanine opportunities; and
Enterprise Growth and Expansion
- Provide mezzanine funding for enterprise growth and expansion.
Makalani will not normally invest in:
- Start-up or greenfields investment opportunities;
- Venture capital;
- Real estate transactions, such as low cost housing, property developments and commercial leasing operations;
- Working Capital and Bridging Loan facilities; and
- Opportunities considered too small within the context of the mandate of the funds (i.e. less than R25 million).
Makalani will pursue a diversified investment portfolio and therefore consider investment opportunities in all the sectors of the South African economy.
The combination of the experience of management and the extensive networks arising from Fund I, Makalani is able to source senior debt as well as equity funding in order to complement its mezzanine investment. In this way, it will be able to leverage the mezzanine debt enabling it to target transactions involving businesses with enterprise values of between R100 million and R2.5 billion.