Investing in local mid-sized companies proves attractive for SA pension funds
JOHANNESBURG: 24 March 2020 – In spite of these difficult times 27four announced the second close of the 27four Black Business Growth Fund II (27four BBGF II) with total capital of R710 million.
The second close includes commitments from Consolidated Retirement fund for Local Government, and Rand Water Provident Fund, as well as further unlock of capital from the Jobs Fund. It has never been more important to invest in the local economy, and we are seeing excellent opportunities to back mid-sized South African companies for long term success.
The fundraising was launched in mid-2019 and has found good traction with local pension funds looking to achieve access to a diversified portfolio of local South African companies. 27four’s partnership with the Jobs Fund creates substantial first loss capital within the fund, and this continues to be an attractive feature for pension fund investors. The blended finance approach allows pension funds to create diversified local private equity exposure at low risk, while achieving tangible impact in the local economy.
According to the Consolidated Retirement Fund for Local Government (“CRF”): “CRF is a leader in Responsible Investing and a PRI signatory, and is pleased to announce their capital commitment to the 27four Black Business Growth Fund. This will be CRF’s third investment in a blended finance fund in South Africa, all of which target job creation. CRF seeks to achieve commercial returns for its members, limit downside risks and have a positive impact on South Africa and expects asset managers to create products that meet all three requirements. We are confident that the 27four BBGF II will achieve these requirements through the innovative Jobs Fund mechanism that has been negotiated. Job creation is a key Social initiative of CRF, which is formalised in our Responsible Investing Policy. Support of black businesses, women-owned businesses and private equity firms is crucial in unlocking South Africa’s true potential and we commend 27four and the Jobs Fund for their efforts in realising this potential during a difficult global and local environment.”
Rand Water Provident Fund commented to say: "Rand Water Provident Fund believes strongly in the impact that its investments can have in promoting job creation and transformation in South Africa and is proud to be part of the Black Business Growth Fund that 27four have set up.”.
The fundraising process is ongoing and expected to reach final close through the course of the year.
About the 27four Black Business Growth Fund II
The 27four Black Business Growth Fund II (BBGF II) is a blended finance partnership between the South African Government through the Jobs Fund, and South African institutional investors, and is managed by 27four Investment Managers. BBGF II invests into Black Private Equity Funds focused on investing into mid-sized South African businesses for growth and job creation. The Jobs Fund has provided concessional funding into the BBGF II to act as first loss capital as a way to encourage local pension fund investors to commit capital to the fund in order to achieve both financial returns and social impact through job creation and transformation. BBGF II is managed by Rory Ord and Chad Potter.