A Tighter, More Complex Capital Environment

South African companies are operating in a challenging capital environment. Bank lending remains constrained, private sector credit growth is modest, and equity markets are hesitant. With IPO activity limited and valuations under pressure, businesses - particularly in the mid-market - are seeking more strategic, flexible funding solutions. The traditional binary of debt or equity is no longer enough. Companies now require capital structures that align with their growth ambitions while managing cost, control, and risk.

Private Credit, Mezzanine and Structured Equity in Focus

Private credit has emerged as a key alternative to traditional lending. Globally, the asset class is expected to exceed US$3 trillion by 2028, and South Africa is beginning to reflect this momentum. Changes to Regulation 28 have allowed pension funds and institutional investors to boost allocations to private debt, which is increasingly stepping in to fund businesses that banks overlook.

Mezzanine finance is particularly well-suited to South Africa’s mid-sized, cash-generative companies. It fills the space between senior debt and equity, offering patient, risk-absorbing capital that does not immediately dilute ownership. Mezzanine’s flexibility makes it attractive for businesses looking to expand, buy out shareholders, or refinance existing debt.

Structured equity instruments such as preference shares or convertibles add further adaptability. These allow investors to share in upside while limiting downside risk. Combined, these instruments form a layered capital stack that is better suited to today's market conditions.

A Capital Stack Built for Strategy

Blended capital structures are increasingly being used for management buyouts, shareholder realignments, growth funding, and recapitalisations. When each tranche of private credit, mezzanine, and equity is properly designed, the result is a strategic capital stack that enhances resilience and supports long-term objectives.

In a rapidly evolving capital market, Tamela helps companies build the kind of capital stack that unlocks growth, protects value, and sustains momentum into the future. This is evidenced by its growth funding for Kiara Health, its role in supporting the expansion and management buy-in of Crossgate through mezzanine financing, and its flexible mezzanine and infrastructure financing solutions that support long-term, strategic business expansion.

How Tamela Can Help

Tamela is a leader in structuring layered capital solutions for South African businesses. Our Mezzanine Debt Fund, with circa R800 million in capital, provides flexible, growth-focused funding to mid-market companies. Through our corporate finance advisory, we design and execute tailored funding strategies, while our principal investments team deploys our own capital in long-term partnerships. For listed and listing-ready companies as well as those looking to delist, Tamela also provides JSE sponsor and governance support.