Mezzanine debt fund manager Vantage Capital said on Wednesday that it had fully exited its investment in fibre-to-the-home operator Vumatel.

“Mezzanine” refers to a hybrid of debt and equity financing that gives the lender the right to convert to equity interest in the case of default by a financed company.  

Vumatel was established in October 2014 by Niel Schoeman and Johan Pretorius, industry veterans who had created the Birchman group and Conduct Telecom before Vumatel.

Vantage said it got its money back from Vumatel last week, after the operator secured “substantial funding” from a consortium of SA banks. Vantage first invested in Vumatel in 2016, with R250m to fund its network expansion. At the time, the fibre operator had deployed its open-access fibreoptic network across 14 suburbs in Johannesburg, passing 16,000 homes, with about 4,000 subscribers. Vumatel had also received equity investment from Investec Equity Partners.

Over the life of its investment, Vantage said, “the number of homes passed has grown 40-fold and the number of subscribers 50-fold as the company has laid thousands of kilometres of cable.

“Vumatel has also played a major role in upgrading the infrastructure of SA schools by providing free uncapped fibre services to public and private schools that its networks bypass.”

Vumatel is now the largest fibre-to-the-home network provider in SA.

In 2019, Remgro-controlled Community Investment Ventures Holdings (CIVH) acquired full ownership of Vumatel after initially taking a 34.9% stake in 2018. With the R73bn backing of Remgro, which controls 54.4% of the company, CIVH has over the past 24 months also acquired fibre provider Dark Fibre Africa, in an effort to tackle the dominance of rivals such as Telkom and Seacom. Vumatel had expanded its network to 570,000 homes by September 2019, according to Remgro.

In a statement, Warren van der Merwe, co-managing partner at Vantage Capital, said the Vumatel investment “is an excellent case study of how mezzanine debt can unlock growth opportunities where banks remain risk-averse. In this way, Vantage plays an important role in supporting mid-size corporates before they are sufficiently established to fully fund their operations and growth ambitions with bank debt.”


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