Sanlam pushes PE fund’s deadline
South African financial services major Sanlam, which floated three alternative investment vehicles a year ago, is looking to make a second interim close of a private equity fund after making a first close short of its original target.
Sanlam made a first close for the Investors’ Legacy PE fund last September with ZAR1 billion (about $70 million) in capital commitments. This is a fifth lower than its original target of ZAR1.25 billion. The firm is likely to have made the first close with the sponsor commitment of its parent.
Sanlam had committed ZAR1 billion to the fund, which aims to raise ZAR2.5 billion with a hard cap at ZAR3 billion. It was initially aiming to wrap up the fundraising process by June 2021 but is now looking at another interim close.
Paul Moeketsi, managing partner at Sanlam Private Equity, informed The Capital Quest, “There will likely be an interim close at June 30, 2021 with a final close planned for December 31, 2021.”
The fund is chasing an internal rate of return, or annualised return, of 25%. It would predominantly look to make equity and mezzanine investments and has an appetite for a buy-and-build platform strategy.
Although generalist in nature, the PE fund will target consumer, industrial, healthcare, financial services and business services sectors. It would not look at startups and early-stage ventures.
The PE firm has already sealed one deal and is in the process of sewing another.
In February, it snapped up a majority stake in meat producer Cavalier Group of Companies, marking its first investment in the red meat industry, for an undisclosed amount. The group consists of five entities: Cavalier Foods (previously Just Lamb), Cavalier Livestock, Cavalier Abattoir and Cavalier Feeders, besides the holding company.
Sanlam PE picked up the stake in a secondary transaction from state-owned lender Land and Agricultural Development Bank of South Africa and Griekwaland-wes Korporatief Bpk, an agricultural and food chain company.
As first reported by The Capital Quest, the PE firm is also in talks to invest in Cape Town-based pet care chain Absolute Pets (Pty) Ltd. If the deal materialises it would be the second deal under the Investors’ Legacy PE fund.
Absolute Pets has more than 60 stores located in shopping malls in South Africa, as per its website. It also runs Gardens Pet Clinic, a full-service veterinary surgery and stockist of prescription foods, in its home town. Besides, the company offers pet spa services and has an e-commerce front-end for people to buy pet-related products online.
The PE fund was one of the three investment vehicles floated by Sanlam a year ago. The other two are debt funds. One is a ZAR1-1.5 billion SME debt fund and the other is a ZAR3 billion corporate debt fund. Sanlam itself has committed ZAR1 billion to the corporate debt fund and ZAR225 million to the SME fund.
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