Investors update: February 23 2023 - Kholo Cap bags $47m for impact investments in South Africa

Kholo Cap bags $47m for impact investments in South Africa

Highlights

• South Africa-based Kholo Capital Mezzanine Debt Fund I, has secured R870 million (around $47 million) in commitments for long-term investment in Southern Africa (i.e., South Africa, Botswana, Namibia, Lesotho, and Swaziland).
• The fund will invest in companies generating a minimum of R25 million EBITDA across various growth sectors of the economy, providing access to capital within a preferred range of R50 to R200 million per investment.
• The firm’s founder and managing partner Zaheer Cassim believes that mezzanine debt funding is attractive because it provides companies with a tailored, more flexible solution supporting their growth needs.

Source: Ventureburn

Our Takeaway

With this news coming just a few weeks after Vantage Capital announced its $377m fund close, it is apparent mezzanine financing is a growing phenomenon in Africa. For businesses, the benefit of this type of funding lies not only in the ability to tailor terms like debt servicing requirements but also in avoiding significant equity dilution when companies try to fund growth ambitions. And importantly, the increasingly diversified capital pool available on the continent plays an important role in supporting the growth of mid-size businesses that would otherwise struggle to access capital from banks.

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Nigerian equities stay positive ahead of crucial elections

Highlights

• The Nigerian Exchange (NGX) closed positive Wednesday amidst buy-interests and sell-offs as bulls dominated proceedings, driving up the broad market.
• The benchmark All-share Index (ASI) appreciated by 0.23% to close at 54,315.53 points, meaning the stock market has advanced by 2,719.87 basis points since the start of the year.
• In the same vein, market capitalization grew by N69 billion ($150 million) to close at N29.588 trillion while the Year-to-Date (YD) returns settled at 5.27%. 

Source: ABC

Our Takeaway

Historically, elections tend to create short-term volatility in financial markets as investors react to changing political and economic conditions. This volatility can be driven by uncertainty about the future direction of government policies, as well as by perceptions of political risk. Ultimately, the performance of Nigerian stocks during the ongoing election season will depend on a complex set of factors, including mainly the outcome of the election. But in clear terms, we expect stock prices to be subdued below real market value due to the political fever and the associated uncertainties in the next few days before and after the election.

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Egypt-based Hollydesk raises $1m venture debt to expand

Highlights

• Egypt-based fintech, an expense management platform for small and mid-sized businesses, Hollydesk has raised $1 million in venture debt financing from unknown investors.
• Founded in 2020 by Mahmoud Moussa, Hollydesk allows companies to manage their expenses, automate approval workflows, and generate reports to analyze spending patterns.
• The funding will be used to expand Hollydesk’s offerings and reach more companies needing efficient expense management solutions.

Source: Wamda

Our Takeaway

Even as tens of millions of Africans have come online in the past decade, most merchants on the continent still run their businesses offline—from managing money to keeping track of inventory, business records, staff, and suppliers. These manual processes can be time-consuming and error-prone. To address this, startups across Africa like Hollydesk have emerged with different platforms that enable small-sized business owners to incorporate digital tools in day-to-day operations while tapping into the multi-billion dollar informal economy. Similar providers include Pastel, Bamba, OZÉ, and Bumpa.