ImpactAlpha, February 12 – Cape Town-based Newtown Partners and Lion Pride Investment Holdings in Johannesburg have announced plans to raise and co-manage a ZAR500 million ($37.4 million) fund that will in invest in small and medium-sized South African enterprises.
The Lion Pride Agility Fund has two distinct share classes targeting two separate themes and risk-weighted returns.
Class B “impact investing” shares that will target fintech, education, healthcare, food and 4th industrial revolution ventures serving the 13.5 million South Africans at the “bottom of the pyramid.” The impact investing pool will aim to return “2.5 to 3 times the risk capital invested within 6 years,” according to the Lion Pride website.
Class C “emerging technology” shares will focus on South African startups with highly scalable and disruptive business models in fintech, agritech, on-demand services, business process outsourcing, renewables and edtech and aim for “an IRR of 35% over a 5-year period.”
The two South African firms have structured the fund as a section 12J fund, which allows investors to deduct 100% of their investment from their taxable income, in exchange for investments into small and medium-sized enterprises with the potential to stimulate economic growth and create jobs.
The structure, LionPride’s Deven Govender said the 12J Marketplace Conference, provides “a great incentive for investors to invest in projects of a developmental nature that can positively impact employment in South Africa.”