OPIC Board Approves $65 Million for Investment Fund for South African Small Businesses

(OPIC) Supports Country's Black Economic Empowerment Program; Target Capitalization of $300 Million

WASHINGTON, D.C. – The Board of Directors of the Overseas Private Investment Corporation (OPIC), the U.S. Government’s development finance institution, today approved $65 million in financing for a new private equity investment fund for South African small businesses. The fund will be managed by one of the country’s most experienced middle market private equity fund managers with strong Black Economic Empowerment (BEE) credentials.

The fund, Medu Capital Fund III, will invest in small and middle-market companies primarily in South Africa, and may also consider investments in other African countries. It will be managed by Medu Capital Ltd. (Medu). The fund has a target capitalization of $300 million.

“In South Africa, like most emerging markets, small businesses suffer from limited access to long-term growth capital, as well as quality management and corporate governance,” said OPIC President and CEO Elizabeth Littlefield. “As a BEE investor, Medu addresses this challenge by providing South African small businesses – many of them family-run – with institutional-quality management, often for the first time. As a result, they will emerge as more enduring, sustainable companies.”

As an example, Medu previously provided growth capital to South Africa’s first and now largest courier pharmacy, Medipost Pharmacy, which delivers medication for chronic illnesses to patients nationwide, including the most rural regions of the country. In the three years since Medu’s investment, Medipost Pharmacy has tripled revenues and doubled profitability while delivering 200,000 prescriptions per month.

Medu was founded in 2003 by Nhlanganiso Mkwanazi and Ernest January with the support of Brait, a South African private equity investment manager and financial services firm. In two previous funds, Medu has invested in engineering, manufacturing and infrastructure-related industries.

Black Economic Empowerment is a program launched by the South African government to redress the institutionalized inequality of apartheid by giving disadvantaged groups economic opportunities previously denied them. Through measures such as skills development, ownership and management, BEE seeks to ensure broader participation in the economy by black people to achieve sustainable development and prosperity.