South African buyout firm Pamodzi Investment Holdings, a black empowerment vehicle, has launched Africa’s largest fund with commitments of $1.3 billion (€943 million), according to media sources.
The fund, which has attracted US investors such as energy company American Metals & Coal International, will focus on investment opportunities in the resource and resource-related sectors in South Africa and across sub-Saharan Africa.
The largest African fund was previously South African buyout firm Brait’s fourth fund, which has commitments of $880 million.
The growth of black-owned funds in South Africa has been driven by the government’s Black Economic Empowerment legislation, which is designed to stimulate opportunities for black people to aid the country’s recovery from its apartheid past.
Warren Hibbert, a partner at placement agent MVision who operates in the South African market, said: “That’s fantastic news. The resources industry is one of the largest sectors in South Africa and has equivalent-sized companies to anywhere in the world. If someone were to raise such a fund on the retail side or as a generalist LBO play they would struggle to deploy their investment in the country.”
The fund may still have problems investing all the funds in South Africa and the sub-Sahara alone, he added.
In February this year South Africa’s largest fashion retailer Edcon was bought out by US firm Bain Capital for $3.5 billion. The protracted $1.2 billion take-private of financial services group Alexander Forbes was also finally accepted by shareholders in June.