Innovative private equity and venture capital investment growth

Hlayisani Growth Fund Investment Mix

The Hlayisani Growth Fund is focussed on mid-market, high growth private equity investments focussed on South Africa with an allowance for Sub-Saharan Africa and East African countries. 

The team believes there are unique investment growth opportunities in the SME ecosystem, with a strategic focus on the ICT and Manufacturing sectors by providing capital and strategic support to enterprises that operate within the agriculture, education, ICT, medical and manufacturing sectors, demonstrating out-of-the-ordinary deal flow and opportunity,  with a natural bias towards technological and manufacturing innovation.

The team has a strong track record in Private Equity and Venture Finance with unique access to proprietary deal flow capturing investment opportunities to deliver superior returns. Through their years of involvement in agriculture, education, manufacturing and ICT – both directly and as investment professionals – the Hlayisani team is uniquely experienced and placed to capture the high growth opportunities in order to deliver above average returns while delivering socially responsible and measurable impact.

Through providing capital and strategic support in order to develop high growth small and medium enterprises, the Hlayisani Growth Fund aims to achieve commercially attractive investment returns for domestic and foreign investors whilst promoting industrial expansion, inclusivity, creation of employment and delivering on social development impact objectives. The Hlayisani Growth Fund development impact objectives are founded on the principles of the UN Sustainable Goals taking into account the unique South African socio-economic needs for greater diversity and inclusion in the domestic economy.

Hlayisani Growth Fund is a black owned, South African based fund specialising in growing SME’s and mid-market companies into large, successful enterprises, operating across multiple territories, creating jobs and generating export revenue for South Africa and Africa.  As SME specialists, we see significant investment return opportunities in core focus sectors, which align strongly with our teams core experience and expertise.

Investment Impact and Environmental and Social Governance

The Fund’s focus is businesses that demonstrate sustainability, growth and investment return.  Within this the Fund looks for impact and the ability to support:

  • Previously disadvantaged groups. 50% of the investment funds are required to flow to businesses with a minimum of 25% black ownership, as defined by the B-BBEE codes of South Africa, over the life of the Fund.
  • Supporting the growth of women entrepreneurs and management teams.
  • Access to connectivity and finance that drives community impact.
  • Job creation, both directly and indirectly through the supporting businesses.
  • Appropriate measurement of Environmental, Social and Governance impact in and of the business.

Hlayisani has built these core values into every part of its own governance and the full investment process from evaluation to investment to realisation. Where appropriate, Hlayisani includes qualified external experts to evaluate, report and advise on: i) environmental impact assessments; ii) environmental and social compliance and governance; iii) regulatory compliance and governance; and iv) legal compliance and governance. 

Target returns

The Hlayisani Growth Fund is a mid-market growth private equity fund targeting unique high growth opportunities with an exposure in select industry sectors through a pool of unlisted assets. 

The Hlayisani Growth Fund is targeting a Return on Equity (“ROE”) of more than 20% net after fees.  This translates to more than four times the amount of money invested in a seven year investment period.

According to the RisCura / South African Venture Capital and Private Equity Association Performance Report, the South African private equity industry delivered a ten-year ZAR IRR of 15.8% as at December 2016 and 11.6% as at December 2017 and 11.8% as at October 2018, despite global economic challenges and at the height of SA’s growth stagnance. Hlayisani believes the change in macro economic factors combined with the Hlayisani Growth Fund investment target selection competitively positions the fund to meet and exceed targets.

Given the focus on high growth innovative businesses, requiring capital to deliver the targeted growth, Hlayisani does not see a dividend distribution during the initial growth phases.

Investment risk

It should be acknowledged that high growth investments do carry a material element of risk, hence the higher than average targeted returns. Hlayisani will be targeting businesses with proven business models and technologies with high growth potential. In order to mitigate investment risk, the team will employ best practice due diligence procedures, implement corporate governance policies and practices, and take an active role in the measurement and management of strategy implementation for the businesses invested into.

Hlayisani will be investing in South African and African investment opportunities. As a result of this, there will be the risk of economic, political or social instability affecting South Africa or any African jurisdictions invested in. The Hlayisani investment team has extensive knowledge and access to networks in the jurisdictions invested into and will wherever possible take the necessary precautionary measures during the due diligence before investing into a target asset to safeguard the investees. It is noted that all risk cannot be mitigated and forms part of the risk associated with this high return-seeking investment company.