Harith-led consortium buys controlling stake in Mergence

Harith General Partners, one of Africa’s leading investors in infrastructure, has partnered with other investors to buy a 51% stake in Mergence Investment Managers for an undisclosed amount, in a deal expected to be closed in the first quarter of 2024, should the competition authorities give it the green light.

In terms of the deal announced on Wednesday, Harith and its partner, a women-led group, will take up a 51% interest in Mergence, and in so doing boost participation by women in the infrastructure investment industry.

Harith CEO Sipho Makhubela said the transaction is an opportunity to drive consolidation and scale creation that will bolster Mergence’s market role in the financial services sector.

“We’re quite purposeful in seeking to ensure that we summon the formidable experience and expertise amassed between Harith’s 16 years of existence and Mergence’s 19 years, to advance the transformation of the broader financial services, and particularly the investment management sector, reduce fragmentation of capital, and stake the claim of black-owned market players who are no longer content with being described as up and coming, but who have earned their stripes,” Makhubela said.

“Our shared commitment to, and belief in, the African continent’s ability to harness capital to unlock value for both investors and societal stakeholders is a particularly pronounced feature of our partnership. It’s that conviction that will stand us in good stead as we seek to build a formidable financial services participant that has diversified public and private market capabilities, ability to leverage synergies and optimise efficiencies.”

Harith, founded in 2006, is developer of infrastructure assets across the African continent, managing more than $1bn of assets in energy, information and communications technology, water and sanitation, and transport. 

Established in 2004, Mergence has grown to an entity that manages R37bn worth of assets. It offers a diverse product range across both public and private market investments, spanning specialist equity and fixed income, multi-asset, infrastructure, debt and private equity funds.

It employs more than 50 people across its operations in Cape Town, Johannesburg, Windhoek and Maseru.

MD Sholto Dolamo said Mergence brings to the transaction “significant expertise” and experience in public markets.

“Infrastructure investment has been singled out by government as a catalyst for economic growth. This consolidation leverages Mergence’s footprint for expanded reach and new investment opportunities,” Dolamo said.

“Notably, we bring to the table experience in water investment, being the only investment manager with a stake via a public-private partnership in the only two privately held water concessions in SA.”

Dolamo was appointed as MD of Mergence just over a year ago, joining from the Public Investment Corporation where held senior roles including acting chief investment officer, and executive head of research and project development, as well as acting GM for listed equities.

khumalok@businesslive.co.za