It has taken New GX Capital, a 100% black and family-owned investment company, a little over a decade to go from a startup to being a business earmarked to be one of South Africa’s next big investment firms with private equity fund and assets valued at over R3 billion.
Just recently, the company made news after securing a R200 million ($13.7 million) expansion capital facility from Vantage Mezz Fund III to be used to finance additional investments as New GX grows its interests in the telecommunications, infrastructure, energy, waste management and information technology sectors in South Africa and the rest of the African continent.
CEO Khudusela ‘Khudu‘ Pitje launched GX Capital in 2005. Pitjie says they pride themselves on helping to start and expand companies in competitive markets, identifying potential avenues for investment and positively contributing to the growth of the SME sector in the country.
“We are an operating investment holding company that creates value for its shareholders and other stakeholders through active rather than passive investment methodology. We have built key skills and track record in incubation and operation of new projects,” says Pitje.
GX Capital helps startups and companies that are operating across various sectors, in the form of incubation, capital and strategic input.
Some of the key ventures in which New GX has been involved in include: being a founding member of Dark Fibre Africa, an open access network that has created over 6 000 jobs within South Africa and is poised to expand within the continent.
The company acquired a 24.5% stake in the South African arm of In2IT technologies, a global technology services firm that provides software and IT infrastructure services to many of South Africa’s companies and Dartcom, a specialist distributor and service provider in the telecommunications and higher-end technology sectors and also offers fiber optic solutions manufactured in their own facilities.
New GX also recently added New GX Environment Solutions (New GX Enviro), a waste management service provider with operations in the City of Tshwane, and Dynamic Instruments, an electrical and control instrumentation business working within thermal power stations, to their list of investments.
Like father like son
Pitje’s entrepreneurial journey began at an early age in Mamelodi, Pretoria, under the guidance of his father HM Pitje, who despite only having a primary-level schooling, went on to became a successful businessman.
Pitje’s father’s businesses ranged from launching the first real cinema in the township and running a number of stores including a liquor store, to investing in property, and even acquiring a transistor radio and charging people to listen. He was also elected the first Mayor of Mamelodi in 1967.
When Pitje was in Standard 7 his family faced a series of financial hardships. The family lost all their businesses as a result of political motivated attacks in the 1980’s. The loss of the family businesses nearly resulted in Pitje being unable to continue with his senior education. It was at this time that he followed in his father’s entrepreneurial footsteps and launched his first business, a hair salon.
Following the completion of his high schooling Pitje would go on to study accounting while still working part time. He graduated as a qualified accountant from the University of South Africa and served his articles at the audit firm, PwC.
On completion of his articles he gained corporate experience working for JP Morgan in London, where he specialised in the sectors that would later prove to be valuable for New GX: telecoms, energy and the public sector.
According to Pitje, the turning point of his business came a few months after his company was established, when New GX was identified as a startup with high potential for growth by one of the major banks in the country, Absa, which was looking to invest in a black-owned businesses. The company received financial backing from Absa which, in addition to their private equity partnership, also held a 9.62% stake in New GX until December 2010.
SME South Africa speaks to Pitje about their investment strategy and what it means to be handpicked to participate in the government’s Black Industrialist Development Programme – an initiative to launch 100 major black industrial companies.
On his definition of Black Industrialist
A black industrialist in my mind is an individual or group of black people that are able to establish and control businesses that meaningfully participate in the industrialization of the South African economy.
The concept is long overdue in quest to transform the economy. Earlier versions such as BEE Act focused on promotion of introduction of black business people in already established businesses. The black industrialist program is targeted at those active black investors that control over 51% of their organizations which should benefit immensely from the introduction of a new preferential procurement act, funding from DFIs and in turn black industrialists should create jobs, promotes well-being of communities and hopefully become leaders in the new economy.
On being handpicked as one of the Black Industrialists
We have established ourselves over a 12 years period in starting and expanding companies in competitive markets. Our companies have disrupted old established markets that we inefficient. We have developed skills in combining DFI and private sector funds to support our new ventures.
On New GX’s role helping to building the economy
Black industrialist should focus on those sectors that are scalable with potential to become Sub Sahara and global players. Sectors that have an ability to create sustainable jobs for South Africans on large scale last experienced within the mining, agriculture and construction industries.
We believe strongly in communities we live in. We have thus far participated in projects that have created over 7 000 jobs and we continue to spend a lot of our resources developing and launching new projects.
On the Vantage Mezzanine Fund III R200 million investment
We developed projects that supported our growth story that we promoted with Vantage thus there was a clear understanding of how we will utilize the funds to support our growth. Two of such transactions have been executed one going to competition commission and the other targeting rollout from end of October 2016. Our corporate governance environment was further enhanced by involvement of an external party.
On scaling and being globally competitive
We are looking to take some of our infrastructure concepts such as DFA, New GX Enviro, Smart Cities and Internet of Things to the rest of the continent and hopefully globally.