WeeklySA_AdminCAPITAL: The agency has allocated R1 billion to 10 projects in healthcare, manufacturing, telecommunication and logistics sectors…
By Nhlanhla Mbatha
The KwaZulu Growth Fund (KZNGF) is set to secure investment funding from an Australian company poised to enter the South African market.
This was disclosed by KZNGF’s Sandile Magubane in a recent interview to shed light on the vital role the fund plays in supporting small and medium enterprises (SMEs) and unlocking investment opportunities in the province.
He said talks between the yet-to-be revealed Australian entity and KZNGF were still underway to pave the path for its prospective direct investment.
Established in 2008 by the KZN Department of Economic Development, Tourism and Environmental Affairs (EDTEA) as a key strategic initiative to accelerate broad-based Black Economic Empowerment (B-BBEE), job creation, and economic growth in the KZN Province.
KZN Growth Fund (KGFA) was structured as a unique public-private partnership venture to finance medium to large private sector projects. The main stimulus being to co-fund and or fund catalytic investments within impact industries as governed by KGFA’s mandate and investment policy.
In the past decade, KGFA has committed and disbursed almost R1 billion to 10 projects in the KZN province in the healthcare, manufacturing, telecommunication and logistics sectors. In doing so, it has accomplished its primary objectives by creating scores of job opportunities through the investment.
The KZNGF is more than just a financial institution; it is a catalyst for economic transformation in KwaZulu-Natal.
As Magubane emphasised, the fund’s primary focus is on job creation. However, before jobs can be created, the economic environment had to be enabled and facilitated.
“This is where the fund steps in, providing financial support and strategic investments in key sectors,” Magubane says.
Established with a clear mandate, the fund aims to accelerate broad-based black economic empowerment (BBBEE) and create sustainable economic growth. It does so by focusing on specific industries that have the potential to drive substantial development.
These include power and energy, logistics and transport, manufacturing, hospitality and tourism, agro-processing, telecommunications, retail (especially in rural areas) and mining with mineral beneficiation.
For entrepreneurs and businesses looking to partner with the fund, understanding its investment thresholds is crucial. Magubane explained that KZNGF offers both debt and equity financing, with investment amounts ranging from R20 million to R100 million.
“Our sweet spot on the equity side is around R50 million because equity involves taking the ultimate risk,” says Magubane. “On the debt side, we can go up to R100 million, as debt financing involves structured repayments and securities.”
He highlighted that equity investment typically involves KZNGF taking a minority stake in businesses, ensuring that control remains with the original owners. The fund usually takes up to 26% of shares, with the goal of enabling transactions rather than taking over businesses.
Funding is just one aspect of the fund’s involvement in businesses. The fund also ensures that recipient companies benefit from strategic guidance and corporate governance oversight.
“When we invest in a company, we secure at least one or two board seats to provide insight and protect our investment,” Magubane stated. He emphasised that seasoned entrepreneurs with extensive business experience are often brought on board to enhance corporate governance and ensure businesses meet their financial targets.
Recognising the transformative power of technology in business funding, KZNGF recently launched an online platform to streamline the application process. Previously, applicants had to manually complete and submit forms, but the new platform allows for seamless online submissions.
“We want to make it easier for businesses to reach us,” Magubane explains. “The online system assesses basic eligibility criteria, such as whether the applicant is a private company since we only invest in private enterprises.”
Despite occasional technical glitches, KZNGF remains committed to ensuring accessibility, even allowing for email submissions when necessary. “We are pro-transactions,” Magubane says. “We want to see deals happening and investments materialising.”
Beyond local businesses, KZNGF is also playing a role in attracting foreign investment. Magubane mentioned an ongoing transaction involving an Australian company entering the South African market. The fund is working to ensure that local entrepreneurs benefit from such deals, bridging the gap between foreign direct investment and local business opportunities.
The fund is more than just a financial entity – it is a driver of economic empowerment and sustainable development. With its strategic investment approach, emphasis on corporate governance, and adoption of digital solutions, KZNGF is well-positioned to continue shaping the province’s business landscape.
For businesses looking to grow and make a meaningful impact, KZNGF presents a unique opportunity to access capital, guidance, and long-term support. As Magubane and his team work towards fostering economic transformation, the future looks promising for SMMEs and large-scale enterprises in KwaZulu-Natal.
