Kholo Capital Locks In ZAR 1.4 B For Its Mezzanine Debt Fund I to Fuel SME Growth

In a significant boost for small and medium-sized enterprises (SMEs) in Southern Africa, Kholo Capital, a specialist alternative investment firm based in South Africa, has reached a major milestone with the final close of its Mezzanine Debt Fund I at ZAR 1.4 B (USD 76.2 M).

The fund, backed by leading South African institutional investors, aims to provide flexible mezzanine debt financing to businesses across South Africa, Botswana, Namibia, Lesotho, and Swaziland—helping them scale, create jobs, and drive economic transformation.

For many SMEs, securing funding is one of the biggest hurdles to growth. Traditional banks have become more risk-averse, tightening lending criteria and limiting access to capital. Kholo Capital’s mezzanine debt model is stepping in to bridge that gap, offering a tailored financing option that sits between senior debt and equity. This means businesses can secure much-needed growth capital without giving up significant ownership, making it an attractive alternative to traditional equity funding.

The fund is specifically targeting high-impact sectors that contribute to economic and social development, including social housing, healthcare, education, renewable energy, food security, ICT, financial technology, and infrastructure – a strategy that aligns with the United Nation’s 17 Sustainable Development Goals. These industries don’t just drive profits—they create jobs, improve lives, and strengthen local economies.

Kholo Capital’s investment criteria include investing in small and medium-sized businesses generating a minimum ZAR 25 M (USD 1.4 M) EBITDA, offering investment sizes ranging from ZAR 70 M (USD 3.8 M) to ZAR 200 M (USD 10.9 M). The mezzanine debt structure allows for flexible repayment terms, including capital repayment moratoriums, giving businesses breathing room to grow without immediate financial strain.

Beyond financing, the fund has a clear job creation and transformation agenda. Kholo Capital aims to create over 500 new jobs, with each investment expected to generate at least 40 net new positions. More than 50% of the fund’s capital is earmarked for black-empowered businesses, reinforcing its commitment to economic inclusion and sustainable development.

Mokgome Mogoba, Founder and Managing Partner at Kholo Capital, sees this as an opportunity to harness the resilience and potential of the South African economy. He emphasized that this fund is not just about delivering financial returns but also about making a real impact—particularly in rural and township economies.

“We are excited at the opportunity to bring creative funding solutions to the Southern African market and to form long-term sustainable partnerships with businesses over a 4 to 7-year investment horizon, realising not only strong commercial returns for our investors but also providing transformational funding that has a positive ESG impact on businesses and surrounding communities as we also look to boost our rural and township economies,” he said.

His co-founder and fellow Managing Partner, Zaheer Cassim, highlighted the non-dilutive nature of mezzanine debt, making it an ideal solution for family-owned businesses, BEE companies, and SMEs that need funding but want to retain control of their equity. He also pointed out that as traditional lenders pull back, mezzanine debt is becoming a critical tool in helping SMEs access capital.

With a strong pipeline of investment opportunities, Kholo Capital is well-positioned to support business growth, job creation, and economic transformation across Southern Africa. As businesses increasingly look for funding solutions that don’t require giving up ownership, the role of alternative financing options like mezzanine debt is only expected to grow.