KLEOSS Capital, a newly created 100% black-owned private equity firm, has acquired a controlling stake in packaging firm TrenStar and expects to complete two more deals within the next few months.
The TrenStar acquisition by Kleoss Capital comes after an exit by another private equity firm, Vantage Capital, and an empowerment partner, African Women Chartered Accountants Investment Holdings.
Kleoss Capital, led by chartered accountants and former career bankers Hale Matsipa, Andile Keta and private equity practitioner Zain Laher, is on the verge of closing its first fund, Kleoss Fund I.
The private equity firm was set up in 2014 after its founders left cushy jobs, took salary cuts and invested a portion of their own personal cash.
Explaining its fund size, Mr Matsipa said: "We are currently on R590m. We think we will get to between R800m and R1bn at close.
"We have recently concluded two due diligence processes in different sectors and we will hopefully close in the next few months."
Kleoss Capital said a large portion of its first fund would be invested over the next 24 to 36 months.
In TrenStar, Kleoss Capital invested alongside private equity investment manager Leaf Capital and TrenStar management. Leaf Capital and Kleoss Capital hold a combined 74% shareholding in TrenStar. Kleoss Capital holds a majority stake of this 74%.
Mr Matsipa said Kleoss Fund I was a general fund, but would not invest in mining or real estate. However, it will invest in mining services companies and ancillary support services firms to the real estate sector.
Kleoss Capital is targeting firms in which it can take up a minimum of a 25% stake to a controlling shareholding.
He said many mid-sized companies had a challenge of running two processes: one where they needed to raise capital to grow, while on the other hand, they needed a black economic empowerment deal to sustain their business growth in SA.
As a black-controlled private equity firm, Mr Matsipa said, Kleoss Capital had the benefit of injecting both empowerment credentials and the capital needed to grow all at once.
"Our private equity firm brings in active operational expertise in the businesses we invest in. We have people who have been bankers and a former private equity practitioner," Mr Matsipa said.
He added Kleoss Capital was unapologetic about driving transformation in the companies it invested in and was not going to be a passive shareholder waiting for dividends. It would also help investee companies comply with empowerment regulations.