Verdant Capital has closed four private equity-related transactions in South Africa with important fund raisings for Bridge Taxi Finance and Retail Capital, the sale of Nedan Oil and the sale of Baxi to MFS Africa.
Verdant Capital has successfully raised ZAR 300 million (approx. USD 20 million) in debt financing for Bridge Taxi Finance from a small group of leading international impact investors. The funding will be used to grow the institution’s lease portfolio. In addition, Verdant Capital has raised ZAR 150 million (approx. USD 10 million) in debt funding for Retail Capital, a leading technology-enabled SME-financer. The first tranche of ZAR 50 million was drawn in October and the balance of which will be drawn in 2022.
Bridge Taxi Finance, based in South Africa, provides affordable credit facilities to South African driver-entrepreneurs in the minibus taxi industry. It has a vertically integrated business model that includes impact vehicle finance, day to day tracking, advice and management, and vehicle repairs and services. The company has financed over 3,200 entrepreneurs to date (1,100 in FY2021 alone). Bridge Taxi finances financially excluded individuals and provides them with an opportunity to own income-generating assets, enabling them to contribute positively to the economy. The transaction is the first introduction for Bridge Taxi into the international markets marking a landmark transaction for the inclusive finance sector in South Africa. Bridge Taxi is majority owned by the founders, with a minority held by domestic private equity.
Retail Capital is the first and largest Merchant Cash Advance provider in the South African SME market. The company was established ten years ago, and it has disbursed over ZAR 4.5 billion to more than 38 000 merchants since inception. It is on target to disburse ZAR 8 billion to small businesses by 2023. Retail Capital continues to make strategic partnerships by working with fintech companies to fast-track the financial inclusion of SMEs. In its growth, Retail Capital has been supported by shareholders from amongst the leading private equity firms investing in Africa, APIS, Crossfin and Future Growth.
The successful raise is the third transaction for which Verdant Capital has acted as sole international arranger and advisor for Retail Capital. This transaction and the capital raise for Bridge Taxi Finance reinforces Verdant Capital’s position as the leading advisor to Inclusive Financial Institutions in Africa.
Also contributing to innovation and disruption to the financial services sector, in a landmark cross-border transaction, Verdant Capital advised leading super-agent in Nigeria to MFS Africa, a leading South Africa-headquartered pan-African payments business and a portfolio company of Lun Partners, Goodwell and Equator Capital.
Finally, Verdant Capital advised Philafrica on the sale of its soya oil crushing interests. Philafrica, a subsidiary of AFGRI, has sold its soya oil crushing plant, which trades in the market under the names Nedan, Marathon, Soya Ya Ka, Promax (soya oil cake). AFGRI is owned by Helios Fairfax Partners, which is a leading pan-Africa-focused alternative investment manager, and the Public Investment Corporation of South Africa.
The sale of the soya oil business is motivated in part by the overall strategy of AFGRI to focus on its core business, which involves providing leading agricultural services to South African farmers, ensuring a food secure South Africa. The acquiror is majority BBBEE-owned party, and the transaction marks an important contribution to the transformation of foods sector in South Africa. Verdant Capital expects an increase in transactions in the agri-business and food sector over the next 24 months, driven by fundamental demand drivers as well the number of private equity investments from the last decade which are now reaching maturity. The successful mandate is Verdant Capital’s fourth successful transaction in the sector in the last 18 months and the firm is currently engaged on other transactions in the sector.