Secondaries funds expose investors to private equity investments and allows them to trade their stakes before the investment reaches maturity. Picture: AI Lab
MeTTa Capital has launched South Africa’s first secondaries fund, which it says will help address the liquidity challenges in the local private equity industry, as well as provide flexibility from the the limited exit options for these investments.
Secondaries funds involve the buying and selling of pre-existing investor commitments to private equity and other alternative investment funds. This market allows investors to trade their stakes in private equity funds before the funds reach their maturity.
MeTTa Capital co-fund manager Tivon Loubser said typical private equity funds lock up capital for extended periods, often five, seven, or even ten years, and this means investors cannot easily access their capital until the fund’s term is reached or until there is an exit.
“It’s a significant problem in South Africa, and we want to pioneer the solution to provide more liquidity in the market,” he said.
MeTTa Secondaries’ inaugural investment is a stake in Kalon Venture Partners Fund I (KVP1), a Section 12J fund that specialises in building and investing in a portfolio of high-growth technology companies.
The KVP1 fund, in its seventh year, comprises technology start-ups such as exposure to Ozow, Sendmarc, Carscan, Peach Bots, and others. MeTTa Secondaries is administered by Grovest, a small-cap administrator in South Africa, with R3.6 billion in assets under administration.
According to a Bain & Company Secondaries Investor Fundraising Report H1 2024, secondary funds raised 92% more capital globally in 2023 than the previous year. The market saw $34.5 billion (R655bn) raised in the first half of 2024.
BUSINESS REPORT
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