27four Investment Managers
26th July 2021
27four BBGF II backs Vuna Partners, continuing its strategy of supporting emerging black private equity managers to generate social impact and commercial returns
27four Black Business Growth Fund II Partnership (27four BBGF II), a blended finance partnership between the South African Government through the Jobs Fund, and South African institutional investors, has announced its commitment to Vuna Partners Fund I (Vuna Fund I) which was concluded at the end of June 2021.
Vuna Fund I is a black private equity fund, with a generalist mid-market strategy, led by founders Siya Nhlumayo and Shafiek Rawoot. The Vuna Partners investment thesis is premised on backing management teams that are strong in their respective industries with a demonstrable track record, and driving sustainable value creation through meaningful alignment of Vuna Fund I’s interests with that of its investee company management teams and strategic sector partners.
27four BBGF II’s commitment takes the Vuna Fund I fund size to R435 million, alongside committed capital already secured from its first close in August 2020.
“We are excited by what Vuna Partners has set out to achieve and believe that our capital will support not only an emerging black private equity manager, but the underlying business and stakeholders on the ground with whom Vuna Partners will partner” says Head of Private Markets at 27four Investment Managers, Rory Ord. “The Vuna team is led by two very credible and capable individuals who are well respected in the market and have a solid track record of not only driving commercial returns for investors, but also driving transformation and impact across the businesses that they are involved in” says Investment Associate at 27four Investment Managers, Ridwaan Kajee.
Vuna Fund I reached its first close in August 2020 and completed its first investment shortly thereafter through acquiring a majority equity stake in specialized supply chain leader 4PL Group.
Driving social impact and commercial returns
Siya Nhlumayo, CEO of Vuna Partners, said “Vuna Fund I’s investment in 4PL Group has already proven itself to be a solid investment, performing above initial expectations. This strong performance and growth in its employee base stand out in a year that has been faced with economic uncertainty and headwinds caused by the COVID-19 pandemic. The impact of COVID-19 has been particularly hard felt by the private equity industry with fundraising levels significantly lower compared to prior years as retirement funds navigate their own liquidity challenges and uncertainties. We are grateful to receive the commitment from 27four BBGF II which will go a long way in getting the Vuna Fund I to its targeted fund size of R600 million and executing on our strategy of delivering market leading returns and impact for our investors.”
Diversity and transformation
Vuna Partners has a clear focus on enhancing diversity and transformation within portfolio companies. The 4PL transaction enhances the BEE ownership credentials of the business through Vuna Fund I’s ownership, and is expected to see an improvement in the overall empowerment credentials over the life of the investment.
“27four’s process of selecting which fund managers to back is robust in ensuring that the spirit of the BEE codes is met and that aspects, such as day-to-day management of the fund, capital participation and the fund manager’s focus on driving meaningful and sustainable transformation in its portfolio, is authentic”, says Ord.
Job creation to date and beyond
Through its previous commitments and investments made over the past 20 months, the 27four BBGF II has already contributed to the creation of approximately 150 jobs. The target is to achieve permanent job creation in excess of 4,000 jobs by the end of the 27four BBGF II term across approximately 50+ business in which the 27four BBGF II will have exposure.
“We remain focused on our deployment and job creation targets, and have screened over 50 black private equity managers since inception of the Black Business Growth Fund programme. We are excited by the short list of managers in our pipeline and hope to reach full commitment of the 27four BBGF II by the end of Q1-2022. COVID-19 has impacted the industry not only by way of severely impacting fundraising activity, but also in respect of investment processes which have had to factor in assessing the impact of COVID-19 on businesses and deal structures to ensure that investor capital is protected. We are, however, optimistic by the post COVID-19 recovery made across various sectors, and by the numerous opportunities that the post-pandemic economy appears to present,” Ord concluded.