Evolutionary Awards 2025 – Mergence: the greatest impact

Category: The Greatest Impact

Describe your evolution:

The Mergence Infrastructure & Development | Equity Fund I (the Fund) is an alternative investment fund launched in 2015 by Mergence Investment Managers (Mergence) as part of its suite of impact funds. The Fund was established to invest in unlisted equity and quasi-equity (e.g. mezzanine debt) in infrastructure and developmental assets, with a strong focus on water, digital infrastructure and affordable housing. This submission outlines how the Fund has contributed meaningfully to the evolution of impact investing in Southern Africa, while simultaneously supporting critically needed infrastructure development in the region.

Beyond long-term, steady financial returns, retirement fund members ultimately benefit by retiring into better-functioning, more resilient communities. Fully invested at its target size of R1.13 billion, the Fund has outperformed its benchmark of CPI + 7%, achieving a return of 15.64% since inception.

The investor base includes a number of large retirement funds. Mergence remains the only black-owned asset manager in South Africa with capabilities across both public and private markets. As early pioneers in impact investing, we launched our first range of impact funds in 2010 and South Africa’s first renewable energy debt fund in 2013.

Over more than a decade, we have developed a track record of successfully deploying capital into infrastructure and developmental assets – earning the trust of asset consultants, trustees, and institutional investors. We have also published an annual Impact Report for the past 10 years – well before this became standard industry practice – see uploaded 2024 report. These reports provide clients with assurance that their funds are invested responsibly and with measurable outcomes.

Our investments are aligned with the UN Sustainable Development Goals, particularly:

• For all investments:
  • SDG 5 (Gender Equality)
  • SDG 8 (Decent Work & Economic Growth)
• Additional per investment in a particular sector
  • SDG 6 (Clean Water)
  • SDG 9 (Industry, Innovation & Infrastructure)
  • SDG 11 (Sustainable Cities & Communities)
  • SDG 7 (Affordable & Clean Energy)

Mergence was also among the first signatories in South Africa to the UN-supported Principles for Responsible Investment (PRI) in 2007.

We undergo an annual assessment process to evaluate performance and identify areas for improvement – and our results continue to validate our approach. We have enhanced our ESG integration framework and continue to implement our ESG Management System (ESGMS) across all private markets transactions. ESG considerations are embedded from due diligence through to monitoring, with impact metrics agreed upfront and reported on regularly by investee companies – reinforcing our commitment to accountability.

Portfolio managers

The fund is managed by Chito Siame and Mosa Molebatsi, 2 highly experienced fund managers.

• Chito Siame Head: Private Equity – Chito joined Mergence in 2011 as an Equity Analyst in the Public Markets team, where he focused on the FMCG, hospitality, financial services, and telecommunications sectors. He transitioned to the Private Markets investment team in 2015 and now serves as Head of Private Equity. In this role, he leads the origination and execution of private equity investment opportunities across the SADC region. Chito has spearheaded transactions in sectors such as aquaculture and microfinance and sits on the boards of several investee companies. BSc Hons, MCom (Financial Management), ACCA.
• Mosa Molebatsi Head: Private Debt – Mosa is a highly experienced investment professional having worked on and led various sizable and novel debt, mezzanine and equity and transactions in South Africa and other African countries. Her key transaction experience spans industries such as renewable energy, telecoms infrastructure, other infrastructure and financial services (insurers and banks). She has worked at the International Finance Corporation, the Public Investment Corporation and Momentum Metropolitan Holdings in various investment roles. She is also involved in lecturing, research supervision and academic research development on a part-time basis. BCom (Actuarial Science, Quantitative Finance), BCom Honours (Finance), Master of Philosophy (Development Finance), CFA® Charterholder

What makes the Fund evolutionary?

The Fund’s purpose is to drive long-term, sustainable growth and improve quality of life through essential infrastructure investments. In a South African context, where delivery of infrastructure lags despite ambitious public budgets, the Fund plays a catalytic role.

Key outcomes include:

• Stimulating economic growth through job creation, local procurement, and investment attraction.
• Improving public services and quality of life, particularly in underserved communities.
• Mobilising private capital through blended finance and PPP models, often de-risking projects to enable institutional participation.
• Achieving through the cycle risk-adjusted returns for our clients, by investing in assets that offer inflation protection, effective risk management and the preservation of capital.

Recent developments such as the February 2025 gazetting of updated PPP Treasury regulations, which streamline approval for infrastructure projects under R2 billion, offer further momentum and opportunity for private investment.

Why this Fund deserves the award

The Fund stands out on the following basis:

• Tangible, measurable impact in underserved areas.
• Innovation in financing and delivery, including pioneering PPPs in the water sector.
• Scalability and replicability across sectors and geographies.
• Strong alignment with global development goals.
• High standards of governance and transparency.

In short, the Fund does not simply deploy capital, it actively drives transformational, inclusive and sustainable change. An award would recognise the Fund’s success in combining favourable financial performance with measurable social impact and encourage broader adoption of this model.

Describe the impact your evolution has had in response to its identified challenges and targeted outcomes.

The impact of the Fund is best illustrated by examining its core investment themes:

Water Infrastructure – SA Water Works (SAWW) (58% of portfolio)

Mergence is the only asset manager invested in the two private water concessions in South Africa via a PPP with SAWW, dating back to 2018. These projects show that structured partnerships between government and experienced private operators can deliver quality, compliant, and sustainable water services.

Impact highlights:

• SAWW received 5 out of 26 Blue Drop Awards in 2024.
• Siza Water, in KwaZulu-Natal, is ranked third-best water service provider nationally; Silulumanzi is the only Blue Drop-accredited provider in Mpumalanga.
• Of SAWW’s 500,000 customers, around 250,000 are indigent households receiving free basic water daily.
• Siza Water operates one of SA’s largest water recycling plants, recovering 3 million litres of potable-quality water daily—cutting demand on bulk supply by 25%.
• Technical water losses average 20%, compared to the national average of 37%.

Affordable Rental Housing – Live Easy (14% of portfolio)

Live Easy’s nano-unit model provides dignified, affordable housing with access to lifestyle amenities—responding to the housing needs of households earning R10,000–R20,000 per month. With a strong appeal to women (60% of tenants), the platform combines affordability with quality of life and location convenience.

In 2023, we partnered with EY to assess the Social Return on Investment (SROI):

• Travel time and distance to work reduced by 50% for tenants.
• Carbon footprint from transport reduced by 71%.
• Tenant savings increased by 132%.

Live Easy is poised to add c.8,000 new units in Gauteng over the next few years—expanding its reach and impact significantly.

Digital Infrastructure – Linteg & Thinkspeed (14% of the portfolio)

Linteg provides open-access FTTH infrastructure to suburban and estate developments, covering 55,000+ connection points across Gauteng (Midrand, Centurion, Sandton, etc.). It enables affordable, reliable fibre access in growing residential areas.

Impact highlights:

• 3,127 new users connected.
• 19 direct jobs sustained (100% black; 5 black women, 5 youth).
• 20 new jobs created, 6 indirect jobs supported—also 100% black and youth inclusive.

Thinkspeed deploys fibre into public, commercial, and residential areas in Century City, Cape Town.

Impact Highlights:

• Connected 14,939 users (1,081 commercial; 13,858 residential).
• 51% of procurement sourced locally (<100km radius).

At the time of submission, the remaining portion of the portfolio is allocated to an energy-efficiency investment (3%) and a cash holding (12%).

Supporting Documentation >