Vantage Mezzanine Fund III invests R200 million ($13.7 million) in a black industrialist business New GX, a leading 100% black-owned investment holding company in South Africa
July 21, 2016
The funds will be used to finance additional investments as New GX grows its interests in the telecommunications infrastructure, energy, waste management and information technology sectors in South Africa and the rest of the African continent.
JOHANNESBURG, South Africa, July 11, 2016/ — Vantage Capital , Africa’s largest mezzanine fund manager, announced today that it has provided a R200 million ($13.7 million) expansion capital facility to New GX Capital , a 100% black and family owned investment company. The funds will be used to finance additional investments as New GX grows its interests in the telecommunications infrastructure, energy, waste management and information technology sectors in South Africa and the rest of the African continent. The parties will also collaborate in assisting communities in Attridgeville, Mamelodi and Soshanguve townships in Pretoria and the Phokwane rural village in Limpopo through the HM Pitje Foundation.
New GX was established in 2005 by Khudu Pitje, a winner in the EY World Entrepreneur Awards Southern Africa emerging entrepreneurs’ category. Khudu and his team have demonstrated an ability to originate, develop and grow companies in some of South Africa’s most dynamic and fast-growing sectors. New GX’s interests in niche markets include equity investments in DFA, Dartcom, Dynamic Instruments and New GX Enviro. “It is amazing to consider that three of our core investments are in companies that were established after 2007” says Graham McGregor the group CFO of New GX.
New GX is one of the founding partners of DFA a carrier neutral provider with over 9000 km’s of open-access fibre infrastructure providing solutions to mobile network operators, fibre to the business users (FTTB), fibre to the home customers (FTTH) and the public sector.
The Group is also a key partner in the growth of In2IT Technologies a business that provides IT infrastructure managed services and application solutions. The business is key in New GX’s strategy of participating in opportunities within internet of things and the boundless world of convergence of IT and telecoms.
New GX is the single largest shareholder in Dartcom which is a specialist distributor of optical fibre communications products and specialised cabling. It is a major supplier to companies within the telecommunication sector that are currently expanding their networks to address the backlog of optical fibre infrastructure in South Africa and the rest of the continent. In this regard, the business recently established presence in East Africa. New GX is utilizing its position in Dartcom to support local manufacturing of fibre, manholes, ducts and other products used by telecommunication networks.
The Group is a majority shareholder in Dynamic Instruments, a CIDB EP9 electrical and control instrumentation business that designs, constructs and maintains large scale electrical infrastructure especially within the complex thermal power station environment. The business has created over 700 jobs since 2012 with ambition to create a further 400 jobs within 12 to 18 months. It has established artisans training centers within power station environments for skills transfer to local people in line with Eskom’s ASGISA program.
New GX founded New GX Enviro a company that specializes in impact investing and new age waste management aiming to resolve community socio-economic issues with long-term build-own-transfer models that allow for the establishment of SMMEs. The business provides off-take revenues of at least R10m per annum to black SMMEs and cooperatives. The business has embarked on an ambitious path of creating 1000 jobs for historical disadvantaged individuals within 18 months and assisting municipalities to augment their waste, water and renewable energy management capabilities through partnerships with the private sector.
Luc Albinski, Managing Partner at Vantage Capital, said “New GX is one the most impressive black-owned and controlled investment companies that Vantage has come across, mostly as a result of the CEO and founder, Khudu Pitje. Khudu has been able to combine an impressive professional background, as a chartered accountant and former banker at JP Morgan, with a very hands-on entrepreneurial drive.”
Mokgome Mogoba, Associate Partner at Vantage Capital, added “New GX has an exciting track record of adding value through operational expertise to its portfolio companies and a history of starting businesses in carefully selected sectors with lots of potential for economic and social returns such as waste management and telecoms infrastructure. Vantage is proud to partner with this fine representative of a new generation of black industrialists that is making a positive impact on the lives of the communities in South Africa’s disadvantaged townships and rural villages.”
Khudu Pitje, CEO and founder of New GX said “we required a flexible and understanding financial partner that could buy into our investment thesis and support us in realising our vision for the future which amongst other things include creation of sustainable jobs and supporting our communities through the HM Pitje Foundation. We are excited to partner with Vantage for the next chapter in our growth story that started from humble beginnings. We are working with development funders to further leverage our capital to rollout large-scale projects that will create sustainable jobs for our people.”
This is Vantage’s 23rd mezzanine investment and the fifth investment in Fund III, which is targeting a final close of R4 billion ($270 million) and has a 40% allocation for South Africa. Vantage Mezzanine Fund III supported the Servest buyout last year, and recently concluded a $20 million investment in Landmark (a Nigerian property group), a R80 million development capital facility in UAG (a Namibian Hospitality and Property Group) as well as a R250 million expansion capital facility which Vumatel is using to expand its fibre-to-the-home network.
Werksmans Attorneys and Weber Wentzel acted as legal counsel to Vantage and New GX, respectively.
New GX is an established 100% black and family owned investment company that was established in 2005 by Khudu Pitje. The company is formed on strong entrepreneurial principles, uniquely positioned within its markets of focus and driven by shareholder value creation. By taking a strategic and active approach to its investment portfolio, New GX provides its partners with the necessary business acumen, financial expertise and industry knowledge needed to assist them in achieving their growth potential through the repositioning of the entities into competitive and sustainable empowered companies delivering a notable impact on all stakeholders, be they internal or external.
New GX takes an active leadership and management role in its portfolio companies and works strategically to strengthen their value proposition and market reach to achieve superior sustainable returns for investors.
Vantage Capital was established in 2001 and currently manages over R8 billion (over $500 million) of investments via its mezzanine debt and renewable energy debt funds. Vantage has offices in Johannesburg and Cape Town and targets mezzanine debt opportunities in a number of high-growth sub-Saharan African countries including South Africa, Ghana, Nigeria, Ethiopia, Kenya, Tanzania, Uganda, Zambia, Botswana and Namibia. More recently, Vantage has begun to focus on some North African opportunities in markets such as Morocco, Egypt and Tunisia as well as on the Mauritian market. Mezzanine is an intermediate form of risk capital, which is situated between senior debt, the least risky tranche of the capital structure, and equity, the most risky. It combines elements of both debt and equity thereby providing companies with long-term funding on terms which are less dilutive to shareholders than pure equity.
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