SOUTH AFRICA – Vantage Capital, Africa’s largest mezzanine debt fund manager, has fully exited its investment in Vumatel, the largest fibre-to-the-home network provider in South Africa.
Vumatel was established in October 2014 by Niel Schoeman and Johan Pretorius, industry veterans who had previously started up the Birchman Group and Conduct Telecom before creating Vumatel.
“The Vumatel investment is an excellent case study of how mezzanine debt can unlock growth opportunities where banks remain risk-averse. In this way, Vantage plays an important role in supporting mid-size corporates before they are sufficiently established to fully fund their operations and growth ambitions with bank debt,” Warren van der Merwe, co-Managing Partner at Vantage Capital, said.
Vumatel started out its life rolling out South Africa’s first fibre optic network to homes in Parkhurst by partnering with internet service providers who provided connectivity to their residential customers whilst Vumatel remained the owner and operator of the infrastructure.
At the time of Vantage’s investment in 2016, Vumatel had deployed its open-access fibre optic network across fourteen suburbs in Johannesburg, passing 16,000 homes and had secured around 4,000 subscribers. It had also received an equity investment from Investec Equity Partners.
Over the life of Vantage’s investment, the number of homes passed has grown forty-fold and the number of subscribers fifty-fold as the company has laid thousands of kilometres of cable.
Vumatel has also played a major role in upgrading the infrastructure of South African schools by providing free uncapped fibre services to public and private schools that its networks bypass.
In 2018, Vumatel was recognised with a prestigious award from the South African Venture Capital Association for the best medium-sized South African growth champion.
In 2019, CIVH majority owned by Remgro acquired full ownership of Vumatel after initially securing a 34.9% stake in 2018.
Vantage’s investors were beneficiaries of this transaction from both ends as Vantage had in a separate transaction provided New GX, a black owned and controlled investor, with mezzanine funding to part-finance their fibre-related assets including local manufacturing capacity.
Vantage exited the New GX transaction in 2018 and recently, Vantage’s mezzanine facility was refinanced by the Vumatel after it secured substantial funding from a consortium of South African banks.
To date, Vantage has now successfully exited 12 investments across its three generations of mezzanine debt funds generating cumulative proceeds of R4.2bn (US$360m) and x-money of 2.3x (1.8x in dollars).
