African mezzanine fund manager Vantage Capital has announced the successful final close of its fourth mezzanine fund.

A total of $377-million of commitments has been secured from a mix of Europe- and US-based commercial investors, as well as a host of development finance institutions (DFIs), including the International Finance Corporation, British International Investment, the Swiss Investment Fund for Emerging Markets, DEG, Norfund, Swedfund, Finnfund and the European Investment Bank.

As with its predecessor funds, Vantage will continue to provide mid-sized African businesses with flexible capital to drive business expansion and support job creation.

In particular, mezzanine debt is noted to be well-suited to robust sectors with strong growth dynamics, including telecoms, healthcare, education, real estate, export manufacturing, outsourced services and selective infrastructure such as private power generation.

Fund IV has made two investments to date, providing early-stage construction funding to Seaton Estates in South Africa for a residential development on the KwaZulu-Natal coast, and backing Egyptian private equity firm Compass Capital to acquire a portfolio of A-grade office buildings in Cairo.

“Vantage is proud of the continued support received from our investors. We were the first independent mezzanine fund in South Africa when we raised Fund I in 2006. Mezzanine was not well known in South Africa at that time, let alone in the rest of Africa. Since then, we have taken our mezzanine product across Africa, targeting 14 markets and having invested in 11 to date.

“Our fundraising success, in such a challenging environment, is a validation of the mezzanine asset class in Africa and of our role as a pioneer in this space over the past 17 years,” says managing partner Warren van der Merwe.

“As with previous funds, a substantial portion of the funds have been raised from private sector investors such as insurers, pension funds and endowments who find our contractual yields and equity upside exposure attractive when compared to private equity alternatives. We have also received valuable support from DFI investors, who appreciate the impact that mezzanine can have in growing mid-sized African enterprises,” he adds.

Since 2006, Vantage Capital’s Mezzanine division has made 33 investments across four funds into 11 African countries.