BUSINESS: Futuregrowth’s Development Equity Fund Acquires Stake in SME Funding Business
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FUTUREGROWTH Asset Management, on behalf of clients, has acquired a non-controlling stake in the shareholding of Retail Capital, a merchant cash advance business that focuses on funding the South African SME market.
Since its inception in 2011, Retail Capital has advanced more than R1 billion to thousands of businesses in the country - including restaurants, retailers, medical practitioners and beauty spas. Retail Capital provides easy access to funding that is transparent through fair and responsible processes, and is striving to make a positive impact to the South African economy through job creation and social responsibility by empowering entrepreneurs.
“This investment is a strong vote of confidence in Retail Capital’s innovative business model, the quality of our operations and systems, and the strength of our management team,” says Karl Westvig, CEO of Retail Capital. “Futuregrowth has been a long-standing partner providing the business with funding and we look forward to a continued long-term partnership.”
The investment will be used to enhance Retail Capital’s offering to SME retailers and restaurants in South Africa, which will provide the necessary economic support South African entrepreneurs so desperately need.
Considered a non-traditional financial services funding solution, a merchant cash advance (MCA) is structured as a lump-sum payment to a business in exchange for an agreed-upon percentage of future credit card and/or debit card sales.
Westvig says that MCAs have the ability to effect great change on the SME market in South Africa – which is often in need of quick and easy access to working capital.
Conway Williams, an investment analyst at Futuregrowth, says that they have a long and successful track record of co-investing alongside management and share Retail Capital’s vision of social development and empowerment. “We are excited about the role that Retail Capital plays in providing funding in the SME space, which has historically suffered from a lack of access to capital. Management’s innovative business approach is commendable and fits with our philosophy of growing small businesses in South Africa. We are excited about our investment and look forward to a long and mutually beneficial partnership”.
Amrish Narrandes, investment analyst at Futuregrowth, says the Development Equity Fund, has a long track record of making equity investments with a developmental focus in sectors such as education, affordable housing, healthcare and SME development, and hopes to increase its exposure to SMEs in the future.
In May this year, Global Credit Ratings (GCR) accorded Retail Capital a national long-term national scale rating of BB(ZA
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