A Tighter, More Complex Capital Environment
South African companies are operating in a challenging capital environment. Bank lending
remains constrained, private sector credit growth is modest, and equity markets are hesitant.
With IPO activity limited and valuations under pressure, businesses – particularly in the midmarket – are seeking more strategic, flexible funding solutions. The traditional binary of debt or equity is no longer enough. Companies now require capital structures that align with their growth ambitions while managing cost, control, and risk.
Private Credit, Mezzanine and Structured Equity in Focus
Private credit has emerged as a key alternative to traditional lending. Globally, the asset class
is expected to exceed US$3 trillion by 2028, and South Africa is beginning to reflect this
momentum. Changes to Regulation 28 have allowed pension funds and institutional investors
to boost allocations to private debt, which is increasingly stepping in to fund businesses that
banks overlook.
Mezzanine finance is particularly well-suited to South Africa’s mid-sized, cash-generative
companies. It fills the space between senior debt and equity, offering patient, risk-absorbing
capital that does not immediately dilute ownership. Mezzanine’s flexibility makes it attractive for
businesses looking to expand, buy out shareholders, or refinance existing debt.
Structured equity instruments such as preference shares or convertibles add further
adaptability. These allow investors to share in upside while limiting downside risk. Combined,
these instruments form a layered capital stack that is better suited to today’s market conditions.
A Capital Stack Built for Strategy
Blended capital structures are increasingly being used for management buyouts, shareholder
realignments, growth funding, and recapitalisations. When each tranche of private credit,
mezzanine, and equity is properly designed, the result is a strategic capital stack that
enhances resilience and supports long-term objectives.
In a rapidly evolving capital market, Tamela helps companies build the kind of capital stack that
unlocks growth, protects value, and sustains momentum into the future. This is evidenced by
its growth funding for Kiara Health, its role in supporting the expansion and management buyin of Crossgate through mezzanine financing, and its flexible mezzanine and infrastructure
financing solutions that support long-term, strategic business expansion.
How Tamela Can Help
Tamela is a leader in structuring layered capital solutions for South African businesses. Our
Mezzanine Debt Fund, with circa R800 million in capital, provides flexible, growth-focused
funding to mid-market companies. Through our corporate finance advisory, we design and
execute tailored funding strategies, while our principal investments team deploys our own
capital in long-term partnerships. For listed and listing-ready companies as well as those
looking to delist, Tamela also provides JSE sponsor and governance support.
For more information, contact Lindiwe Tshabalala on +27 11 783 4907 or
lindiwe@tamela.co.za.
