South African investment house Pamodzi Investment Holdings (Pamodzi) on Friday launched a South African-led private equity fund with $1,3-billion available for investment, making it the largest on the continent.
All the funds come from leading US institutional and private investors.
“International support for the fund, to be known as the Pamodzi Resources Fund I (PRF), is an overwhelming vote of confidence in the future of South Africa and sub-Saharan Africa. It is also further evidence of our proven ability to attract long-term foreign direct investments to South Africa,” said Pamodzi CEO Ndaba Ntsele.
The PRF will focus on the highest-return investment opportunities in the resources and resources-related sectors, primarily in South Africa and across sub-Saharan Africa.
“There is a tremendous opportunity to generate superior financial results from resources in sub-Saharan Africa. Our optimism is shared by peer companies who have grown their private equity investments in mining and natural resources by a factor of four over the past year,” he said.
The fund managers, most of whom currently hold leadership positions, will be announced next month.
Ntsele is “bullish” on the fund’s upstream and downstream impact on the South African economy.
“Independent research indicates such investments into local companies hold huge benefits for the country. Apart from the cash effect to develop major businesses, they also have a multiplier effect on secondary industries,” he noted.
The fund substantially raises the previous bench mark set by South African-led private equity funds and its entire funding came from offshore.
Pamodzi has already submitted an application to the South African Reserve Bank to approve the PRF.
“The PRF enables us to diversify our investments into resource opportunities in sub-Saharan Africa that offer the highest sustainable returns. This complements our traditional private equity business and provides us with a diversified, risk-acceptable yet lucrative investment footprint on the subcontinent,” said Ntsele.
“It also substantially increases our participation in the resources sector,” he added.
The PRF is black owned and controlled, and funds under its management will enhance the black economic-empowerment status of the portfolio companies, in terms of South Africa’s financial services sector charter.
The fund is backed by a consortium of US investors, including affiliates of American Metals & Coal International Inc. (AMCI), a leading international investor in the global energy and resources sectors.
“AMCI is a long-term investor in the energy and resources sectors, and we see tremendous opportunity in these sectors in South Africa,” said AMCI chairperson Hans Mende.
