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FirstRand's new debt-investment fund to raise R1bn

Jun 01 2018 20:27
Loni Prinsloo, Bloomberg

FirstRand’s [JSE: FSR] Ashburton Investments is starting a new debt-instrument investment fund, as Africa’s biggest bank by value seeks to take advantage of lending gaps and opportunities in the south of the continent.

The Ashburton Mezzanine Fund raised more than R500m in its first round, and is targeting R1bn before closing to investors within the next 12 months, money manager Ashley Benatar said in an email. It will target mezzanine debt.

The fund will be used to invest in opportunities in South Africa and about 20% will be allocated to Botswana, Namibia and Zambia, said Benatar. The fund will target investments of between R75m and R150m and will be sector agnostic, said Benatar.

Mezzanine debt offers investors a "compelling" alternative to investing in traditional assets such as equity, he said.

Market slumps over the past decade have led to prolonged recoveries and low growth in equities, boosting demand for alternative investments as investors seek higher yields, said Benatar.

The fund will target returns of 20% from its investments of between R75m and R150m each in established mid-market or large companies with profitable track records. "It offers investors close to equity returns while taking debt-like risk," he said. 

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