Kholo Capital Mezzanine Debt SA Fund and Maia Capital Partners have invested R250 million in Catapult Group to support its expansion and help it manage its existing debt. This funding will give Catapult greater financial freedom as it enters its next phase of growth.
The Catapult Group is a South African-based group that manufactures and distributes specialised building products. It serves the commercial, industrial, and residential property sectors and has a strong retail presence, with its products available in more than 3 000 stores across the country.
Most recently, it has made several key acquisitions, including Everite and Swartland. Everite is known for its Nutec range, which is a fibre cement product line, including ceilings, wall cladding, roofing materials such as fascia and barge boards, roofing slats, building columns, cornices, window sills, and lightweight bricks known as Autoclaved Aerated Concrete (AAC).
Swartland, on the other hand, produces top-quality wooden and aluminium products such as window frames, doors, garage doors, cornices, awnings, insulation, and skirtings. These acquisitions have helped Catapult establish a strong position in the building material sector, backed by trusted brands and reliable products.
The Significance of the Investment for Catapult Group
The significance of Maia Capital Partners, an investment firm, and Kholo Capital, an investment company, investing in the group is that the combined expertise will make an impact in mezzanine debt within the construction industry.
Mezzanine debt is a financial instrument that helps bridge the gap between debt and equity financing. It’s a high-risk form of debt, so it’s not something that every financial institution is able to provide, but it can offer some of the highest returns, too.
The R250 million injection for the Catapult Group will enable the group to fund growth capital expenditure and to refinance a portion of existing senior debt. This creates cashflow headroom for the business as it embarks on its next growth phase.
A Boost for Growth and Job Creation
Zaheer Cassim, managing partner and founder of Kholo Capital, says the partnership with Catapult will support the company’s business goals while also helping grow the economy. “We are proud to be part of Catapult’s journey. This R250 million investment will support their expansion and also give them more financial freedom to grow steadily. We are also excited about the new jobs that will be created during this period. Job creation is a key focus for us at Kholo Capital,” she said.
Mokgome Mogoba, who is also a managing partner and co-founder of Kholo Capital, mentioned that they are confident in Catapult’s management team and their long-term vision. “Catapult is run by a solid team and backed by strong investors. The business has delivered strong results over time, with strong earnings and a clear position in the market. We are excited to play a role in the next chapter of its success,’ he shared.
Kholo Capital Under the Lens
Kholo Capital invests in businesses in the following industries:
- Education
- Healthcare
- Telecommunications
- Consumer Facing
- Financial Services/Technology
- Manufacturing
- Media
- Real Estate
- Selected Infrastructure
- Proven Information Technology
It assists businesses with growth capital, ESG and Impact Investing, BEE Financing, acquisition Financing, property financing, LBOs / MBOs, and leverage recaps.
The type of companies they aimed to invest in need to have the following characteristics:
- Companies with incentivised, talented, committed and proven management teams.
- Strong, reputable and aligned equity sponsor of reference.
- Substantial shareholder/management “skin-in-the-game”.
- Solid track record of profit history and historic cash flow generation.
- Sustainable, stable, predictable and strong cash flow generation with manageable capex needs and limited working capital requirements.
- Typically generates a minimum EBITDA of R25 million;
- Flexible cost structure, pricing power, healthy gross profit and EBITDA margins.
- Conservative financial leverage – with acceptable leverage ratios (i.e. typically not exceeding 4,5x Debt to EBITDA multiples).
- Prudent capital structures that can withstand a range of business cycle conditions
- Well-developed internal controls, systems and strong financial discipline.
- Established and stable market with hard-to-replicate competitive positioning and high barriers to entry.
- Diverse mix of products, customers, suppliers and geographic markets.
- Differentiated product lines with extended life cycles and low obsolescence risk.
- Low threat of technology substitution.
