This case is reserved for use by Columbia Business School Faculty only.
What are the growth options for a South African mezzanine fund operating within the country's framework of incentives for black-owned businesses?
What are the growth options for a South African mezzanine fund operating within the country's framework of incentives for black-owned businesses?
Within two years of its debut, the South African mezzanine fund Makalani had financed 21 transactions in accordance with South Africa's Black Economic Empowerment policies, which provided incentives for equity interest sales to black owners, and was listed on the Johannesburg Stock Exchange. Now its chief executive, Vusi Mahlangu, was pondering the fund's future. With competition growing for BEE deals and new funds entering the mezzanine market, Mahlangu is considering whether Makalani should seek growth in the fund's current space, whether to branch into private equity or even expand beyond the empowerment financing area. In this case students consider Makalani's strategic choices after examining South Africa's empowerment policies, Makalani's performance metrics and investments and the structure of one of its BEE transactions.