S.A’s African Phoenix Investments Sets Aside ZAR 1.2 Bn Private Equity Fund

Investment holding company African Phoenix Investments has set aside approximately ZAR 1.2 Bn in equity financing to invest in South African businesses. The Johannesburg-based firm says it will use the funds to invest in 8 to 10 deals over the next three years. 

The investments will be released in tranches of about ZAR 500 Mn, and already has two deal under due diligence. The fund is part of API’s strategy to shift from being a financial services firm to an investment holding company. 

African Phoenix Investments emerged when African Bank Investment Ltd came out of business rescue. After separating from its parent firm, API sold its long-term insurance business, Strangen, in a ZAR 140 Mn deal to King Price. Strangen seizes to be a subsidiary in African Phoenix (the old ABIL), effective October.

African Bank was placed under curatorship by the South African Reserve Bank in August 2014 due to soured loans, after which it was separated from African Bank Investments.

African Phoenix will be providing seed capital to the API Capital Fund in order to invest in unlisted businesses. Companies in the telecommunications, education, and healthcare sectors stand to benefit from the investments.

A statement following the announcement of the fund revealed that API Capital Fund is not trying to make a return in three or five years. According to Siya Nhlumayo (featured image), CEO emeritus, the company wants to be a long-term investor in investee companies and take an active role in their operations”. Nhlumayo now leads the new fund alongside Shafiek Rawoot, African Pheonix’s former financial director. 

Shifting to an investment holding firm was made possible for African Phoenix via its repurchase and cancellation of all the 13.5 million preference issued by African Bank Investment Ltd in about 10 years before it went under. 

In the South African business landscape where equity models have hit many a rough patch, investors are retreating to the ones that create sustainable value by tying up with the management of investee business for the long term. While supporting its growth strategy, this is the philosophy that is API Capital’s lifeline in its new operations. 

Featured image: Africa News 24