Mezzanine debt fund manager Vantage Capital announced this week that it has fully exited its investment in fibre-to-the-home operator Vumatel.
The fund manager invested in Vumatel in 2016, just two years after the operator launched. At the time, the Vumatel had deployed its open-access fibre optic network across 14 suburbs in Johannesburg, passing 16 000 homes and had secured around 4 000 subscribers.
Vumatel had also received an equity investment from Investec Equity Partners.
In a statement, Vantage says: “Whilst banks were unwilling to fund the company at this early stage in its life, Vantage recognised the tremendous potential of the business and supported it with R250 million ($17 million) of capex funding to accelerate its rollout.
“Today, just four years later, Vumatel has become the largest provider of fibre-to-the-home in the country. Over the life of Vantage’s investment, 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.”
The fund manager also lauded Vumatel for playing a major role in upgrading the infrastructure of South African schools by providing free uncapped fibre services to public and private schools that its networks bypass.
The statement says last year, CIVH majority-owned by Remgro acquired full ownership of Vumatel after initially securing a 34.9% stake in 2018.
“Vantage’s investors were beneficiaries of this transaction from both ends as Vantage had in a separate transaction provided New GX, a black-owned and controlled investor, with mezzanine funding to part-finance their fibre-related assets including local manufacturing capacity,” it says.
It adds: “Vantage exited the New GX transaction in 2018 and last week, Vantage’s mezzanine facility was refinanced by Vumatel after it secured substantial funding from a consortium of South African banks.”
Furthermore, the company says to date, Vantage has now successfully exited 12 investments across its three generations of mezzanine debt funds.
Luc Albinski, co-managing partner at Vantage Capital, explains: “Vumatel is one of our many success stories where we have supported businesses with mezzanine debt to achieve their growth ambitions. In this investment, we saw the opportunity to partner with an exceptional management team in a fast-growing sector and we are proud of the role Vantage played in unlocking the exceptional growth that Vumatel has since delivered.”
The fund manager is exiting Vumatel at a time the fibre operator is a beneficiary of unexpected windfall courtesy of outbreak of COVID-19.
Since March, when president Cyril Ramaphosa declared the COVID-19 pandemic a national disaster in March, most people are now working from home, which is throttling broadband services across the country.
As a result, Vumatel says it has seen an increase in the demand for reliable, high-speed fibre connectivity as more South Africans work and learn from home.
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