Vantage Capital, an Africa-focused mid-market private equity firm, has struck its first deal of the current year, picking a minority stake in a South African business process outsourcing services provider.
The Johannesburg-headquartered private equity firm deployed $18.5 million in Procera Group, a BPO firm serving both South African and international clients, from its fourth Mezzanine Fund.
Besides the acquisition of a significant minority equity stake from the Procera founders, the deal includes the provision of a mezzanine facility to support future strategic acquisitions by Procera.
Capital deployment by Vantage Capital will facilitate Procera’s expansion into international markets. Procera currently services over 50 local and international blue-chip clients across key industries such as retail, financial services, energy and telecommunications in countries including South Africa, Namibia, the UK, the US, and Australia.
Vantage Group, the largest independent pan-African mezzanine debt fund manager, has made 33 investments across four successive funds into 11 African countries since 2006.The latest investment comes amid an optimistic outlook for the BPO sector in the African market. The South African BPO market is expected to achieve a 13% CAGR over the next five years ahead of global growth forecasts for the sector of 8.5% CAGR, according to industry estimates.
“Vantage sees a tremendous opportunity for both job creation as well as a positive economic impact as Procera continues its rapid international expansion and drives market-leading technological solutions in the BPO space. Vantage is proud to partner with a very capable management team and committed long-term investors,” said Roshal Ramdenee, associate partner, at Vantage Capital.
Last year, Vantage Capital deployed capital in two companies - Moroccan medical devices producer and distributor Promamec, and innovative water security solutions provider Aquasantec.
The International Finance Corporation (IFC)-backed Vantage Mezzanine Fund IV marked a final close in 2022, raising $378 million to focus on the African mid-market sector. It aims to make 76% investment in US dollar and Euro investments across pan-Africa and 24% in Rand investments in Southern Africa.
Key backers of the fund include a mix of European and US-based commercial investors, as well as a host of development finance institutions, including World Bank’s private investment arm IFC, British International Investment (BII), Deutsche Investitions-und Entwicklungsgesellschaft (DEG), The Swiss Investment Fund for Emerging Markets (SIFEM), Norfund, Swedfund, Finnfund, and the European Investment Bank (EIB).
Vantage’s $150-million inaugural mezzanine fund, raised in 2006, invested into five South African companies. Its second $240-million mezzanine fund, raised in 2012, invested in a portfolio of 13 companies across Africa and the third mezzanine fund of $287 million, raised in 2015, made 13 investments spread across the continent.
Meanwhile, Procera, founded in 1990 as a debt recovery solutions provider, has evolved into an integrated BPO services group over the last three decades. It offers support solutions to its clients through its proprietary contact center software, and deployment of emerging technologies such as predictive analytics, generative AI, and omnichannel communications.
“We are very pleased to have the long-term support of Vantage and its team of seasoned investors as we look to grow Procera’s business services footprint into international markets,” said Crispin Sonn, chairman at Procera.
While PwC acted as financial advisor to the transaction Werksmans acted as legal counsel for Vantage. Other advisors to the transaction included Step Advisory, Ernst and Young, Webber Wentzel, Eversheds, STBB, and IBIS Consulting.