Kleoss Capital Fund II closed at approximately R751 million and is now fully deployed. The Fund maintains a sector-agnostic investment mandate and, where appropriate, co-invests alongside other private equity sponsors and aligned strategic investors. Fund II’s investment strategy incorporates lessons learned from both the COVID-19 pandemic and the Fund I investment experience, resulting in a heightened focus on resilience, capital preservation, cash generation, and value creation.
Accordingly, Kleoss prioritises investments exhibiting the following characteristics:
The Fund seeks to mitigate investment risk by structuring transactions with embedded downside protection where feasible. This may include the use of alternative capital instruments such as vendor financing, convertible instruments, preference shares, earn-out mechanisms, put options, and other bespoke transaction structures, rather than relying exclusively on direct equity investments.
Kleoss targets businesses with robust cash conversion characteristics and the ability to generate sustainable free cash flow. This enables portfolio companies to support growth initiatives, reduce acquisition-related leverage, and, where appropriate, return capital to investors within the short to medium term.
The Fund favours investments in businesses that either possess an embedded infrastructure theme or have demonstrated resilience through periods of economic disruption, including the COVID-19 pandemic. Such businesses typically operate within sectors that provide essential products or services and exhibit strong defensive characteristics.
A demonstrated history of operational success supported by an experienced and stable management team is a key investment requirement. Preference is given to businesses whose leadership teams have successfully navigated multiple phases of the economic cycle, including periods of both expansion and contraction, thereby evidencing sound operational and strategic execution capabilities.
Target businesses should possess a sustainable competitive advantage or economic “moat” that enables them to maintain and strengthen their market position relative to peers. Such advantages may arise from a differentiated niche offering, favourable cost structures, strong customer relationships, strategic geographic positioning, specialised capabilities, or other identifiable competitive attributes that support long-term value creation.
Kleoss seeks investments where it can exercise meaningful strategic influence and partner closely with management to accelerate value creation. Areas of focus include growth strategy execution, operational enhancement, risk management, capital allocation, financial restructuring, governance optimisation, succession planning, systems development, ESG initiatives, and transformation objectives.
The Fund favours investments that offer several practical and clearly identifiable exit pathways within an anticipated seven to ten-year investment horizon. Potential exit routes include trade sales, secondary private equity transactions, management buyouts, public market listings, recapitalisations, and rollover opportunities. Preference is given to businesses that provide flexibility in exit timing and maximise the probability of successful value realisation.
Collectively, these criteria position Fund II to invest in resilient, cash-generative businesses with experienced management teams, defensible competitive positions, and significant opportunities for strategic value creation, while maintaining a disciplined approach to risk management and capital preservation.
