MIC puts R147m into fund for exceptional SA and African companies

THE MINEWORKERS Investment Company (MIC) has committed $10 million (R147m) to Knife Capital’s new African Series B expansion fund.

Known as Knife Fund III, the fund aims to raise $50m to directly invest behind the aggressive expansion of South African breakout companies, and co-invest with other credible funders in companies across the rest of Africa.

“The focus will be on scalable, business-to-business technology companies that have attractive exit optionality,” said MIC.

MIC’s chief investment officer, Nchaupe Khaole, said the commitment positioned MIC as anchor investor to the fund, alongside other local and international investors.

“The move to change the way local institutional investors approach venture capital investment has been in the pipeline at MIC for a number of years now.

“Our venturing into the earlier-stage alternative asset class space makes sense, given the slow economic growth in the past three years,” said Khaole, who added that the impact of investment in small- to medium-scale enterprises on innovation, job creation and economic growth was crucial, and therefore urgent to unlock, especially right now.

“Our commitment brings to the table the investment, along with many of our strengths as an experienced player. One of which is our ability to influence the companies within our portfolio to partner with us and effect real, tangible change to the South African economy. We are delighted to be a key catalyst in the success of this funding round,” Khaole said.

The Fund consists of two main funding vehicles – a US dollar-denominated limited partnership in Jersey and a rand-denominated limited partnership in South Africa – which will co-invest alongside one another in portfolio companies. MIC is investing in the rand-denominated partnership.

Keet van Zyl, a partner at Knife Capital, said the fund was an attractive opportunity for MIC as it was built on the success and momentum created in Knife Capital’s previous funds, and supported its value-chain approach to investment.

“MIC is already proving themselves to be a value-adding partner that has the funds and experience to responsibly deploy capital, as well as the vision to influence positive change in this emerging market,” said Van Zyl.

Van Zyl said the team was now rolling out Knife Fund III to address the critical Series B funding gap that had characterised the venture capital asset class in South Africa, resulting in businesses not reaching their full potential, or exiting too early.

The MIC is a 100 percent blackowned investment company established in 1995 by the Mineworkers Investment Trust to create a sustainable asset base for the benefit of mine, energy and construction workers and their dependants.

MIC invests in a variety of large and small companies in various sectors, as well as focusing strongly on corporate governance and true transformation.