Sanlam PE strikes fourth control deal from new fund

 Sanlam PE strikes fourth control deal from new fund

Sanlam Private Equity (SPE) said Wednesday it has acquired a controlling stake in SkipWaste, a provider of integrated waste management services to commercial, industrial and retail clients primarily in Gauteng, South Africa.

The PE firm didn’t disclose the amount it invested. However, it struck the deal via a fund that has a sweet spot to invest around $15-30 million.

The Capital Quest had first reported last October that Sanlam’s PE fund was set to ink a new deal in the waste management segment.

SkipWaste has been family-owned and run since it was founded nearly four decades back. It operates from three depots across Gauteng besides a 13-hectare waste treatment facility in Springfield.

It has an integrated business model, spanning onsite waste management, primary storage, waste logistics, recycling and recovery as well as alternative disposal and conversion. The firm has over 1,000 clients and 3,000 sites primarily in Gauteng.

The firm is looking to diversify through diversion of various organic, food and construction waste from more clients seeking “greener” waste management solutions and increased contribution to the circular economy through recycling and conversion.

Paul Moeketsi, Managing Partner at SPE, said: “Given our credentials as a black fund manager in terms of the BEE Codes of Good Practice, SkipWaste is set to become the largest majority black-owned integrated waste management solutions provider and a preferred waste-partner for clients looking for greener waste solutions.”

SkipWaste was advised by Novitas Capital Advisors for the transaction.

This is the second deal for SPE within a year and the fourth from its new fund.

The PE firm had struck two deals in 2021, including a control transaction for meat producer Cavalier Group of Companies and Absolute Pets. Last year, it struck a control deal for Pretoria-based technology company Q Link.

Fund closure

Meanwhile, Sanlam has further pushed back its final close for the new PE fund. Sanlam made a first close for the Investors’ Legacy PE fund in September 2020 with ZAR1 billion (about $70 million then) in capital commitments. This was 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 aimed 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, as first reported by The Capital Quest, was looking to make another interim close by June 2021 with a final close by December last year.

It is not clear if it did make a second close but is now believed to have pushed the deadline for a final close by March 2023.

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 fund was one of the three investment vehicles floated by Sanlam two years 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.

Vivek Sinha

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