Business Maverick

WEALTH OF IDEAS

New investment funds focus on doing good in South Africa

New investment funds focus on doing good in South Africa
A Gift of the Givers truck offloads water at Jubilee District Hospital in Hammanskraal. (Photo: Felix Dlangamandla) I Old Mutual's offices in Johannesburg. (Photo: Waldo Swiegers / Bloomberg via Getty Images)

Three recent fund launches emphasise social responsibility and nation-building.

Less than a month after the national Budget hailed public-private partnerships as the way forward and called for more help from the private sector, three different funds are coming to the table with investments in socioeconomic projects, tech start-ups and infrastructure.

Gift of the Givers Life Fund – socioeconomic projects

The Old Mutual Gift of the Givers Life Fund is structured as an endowment portfolio, fully invested in the Old Mutual Albaraka Income Fund.

The Old Mutual Albaraka Income Fund adheres to sharia (law) and does not invest in companies involved in alcohol, gambling, non-halaal foodstuffs or interest-bearing instruments.

Old Mutual ensures compliance across its sharia range through a supervisory board responsible for ensuring that the funds adhere to the standards of the Accounting and Auditing Organisation for Islamic Financial Institutions.

All income from the Old Mutual Gift of the Givers Life Fund is directed to the Gift of the Givers Foundation. The funds will be dedicated to supporting disaster relief and humanitarian efforts in South Africa.

Because the income of the endowment fund is donated, a tax advantage accrues to it. Old Mutual, on behalf of investors, claims this tax benefit and reinvests it in the fund to ensure capital appreciation.

Dr Imtiaz Sooliman, founder of the Gift of the Givers Foundation, says: “We pride ourselves on the speed and effectiveness of our disaster interventions.  The generosity and spirit of Ubuntu from South Africans has always been amazing.

“However, we need to be better prepared for disasters. We must address the crises within the education and healthcare sectors, as well as address the ongoing problems of hunger, water and sanitation. 

“We have been doing much of this already, but the need is huge and growing. This is why this partnership with Old Mutual Wealth is so exciting for us.”

Farhad Sader, managing director of Old Mutual Wealth, says the fund, available to both individual and institutional investors, provides an opportunity to invest with purpose and create real change in communities.

Conducive Capital – BEE venture capital company investing in tech start-ups

Conducive Capital is a newly formed, majority black-owned South African venture capital company investing in early- and growth-stage disruptive technologies that are post-revenue, capital-efficient and have good unit economics with product market fit and the ability to scale their businesses.

The company’s founding partners are Clive Butkow, founder and former chief executive of Kalon Venture Partners, and Mitchan Adams, co-founder of Ozow – a leading South African fintech company – and CEO of Aions.

Collectively, Butkow and Adams have invested more than R300-million in early-stage funding, with an internal rate of return of more than 30% over the past seven years.

Butkow says: “We are plugged into networks that can open doors to international ecosystem players and mentors, as well as local and global investors for follow-on funding.”

The fund aims to raise its first close in July 2024 at $15-million, with a target final close of $50-million within two years.

The fund seeks to improve diversity in the early- and growth-stage investment sector as well as develop the next generation of black woman venture capitalists.

“We need women in this space in particular,” says Adams. “And black women – there are not nearly enough.”

Kalon Venture Partners is known for its disruptive influence in the digital venture capital sphere and Ozow is a trailblazer in the payments industry. “It means we bring both business acumen and tech know-how to the equation,” Adams adds. “And we go beyond just monetary investments. Alongside funding, Conducive Capital pledges comprehensive support, offering strategic guidance, operational expertise and mentorship to nurture start-ups, facilitating their growth into industry frontrunners.”

Ninety One Infrastructure Credit fund – infrastructure project loans

Asset manager Ninety One launched the Ninety One SA Infrastructure Credit Fund this month, with a mandate to promote sustainable and inclusive growth in South Africa.

Amid the country’s problems with power, rail and ports, more than 80% of investments will be in South Africa, delivered through debt funding of public and private infrastructure.

Ninety One is leveraging its expertise in managing illiquid and liquid credit to launch the fund. With a track record of more than two decades, its emerging market alternative credit team manages assets of more than R108-billion, has invested R58-billion in infrastructure in South Africa and the rest of Africa, and supported more than 130 projects with a deployment rate of R7-billion a year.

The new fund is open-ended, allowing for the inclusion of longer-dated infrastructure project loans and bonds, while supporting greater investor liquidity.

Using a mixture of public and private credit, the fund invests primarily in a diversified pool of senior debt instruments (both loans and bonds) focusing on South African infrastructure and developmental assets.

Current investments include the South African National Roads Agency, the Lesotho Highlands Water Project, the Airports Company South Africa and KaXu Solar One, the first solar thermal electricity plant in South Africa.

Nathaniel Micklem, joint head of emerging market alternative credit at Ninety One, says South Africa should be spending at least 30% of GDP on infrastructure by 2030 to promote inclusive economic growth.

“Unfortunately, the reality is that, compared with the rest of the world, South Africa is in the bottom quartile of gross fixed capital formation as a percentage of GDP. The World Bank has estimated that this key metric supporting infrastructure investment was at just 14% in 2022…

“This fund has been designed to encourage investors to contribute to South Africa’s nation-building and economic growth while benefiting from solid investment returns.”

Micklem says the fund provides investors with exposure to infrastructure as an asset class, which supports diversification, given its low correlation to other asset classes.

“Investors also have access to liquidity through quarterly withdrawals – a feature not typically available from infrastructure assets – and access to a differentiated infrastructure debt offering across multiple sectors.” DM

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