South Africa: PAPE Fund 3 announces new investment

PAPE Fund 3, a mid-market South African private equity fund, has acquired a majority equity interest in Scamont Investment Holdings, an African engineering OEM specialising in the manufacture, distribution and servicing of positive displacement slurry pumps and multistage centrifugal pumps.

The business was founded in 1978 and is headquartered in Roodepoort in Gauteng. Scamont services customers in South Africa and in the central and west African mining sectors. It has recently embarked on a programme to expand its global footprint by targeting mines in North America.

Scamont aspires to become a significant supplier of specialist dewatering pumps in the world, and to date it has an established presence in Zambia, Ghana and DRC, and has entered the North American region to service the deep underground mining activity in the USA and Canada.

PAPE Fund Managers principals, Zuko Kubukeli and Justin Babaya, led the transaction. PAPE Fund 3 is a limited liability partnership, private equity fund managed by PAPE Fund Managers. PAPE Fund 3 was established in July 2018 and completed final capital raising in January 2020, with ZAR1.03bn (US$59 million) in investor commitments. The fund has a 10-year investment-to-exit horizon.

To date, and including the Scamont transaction, PAPE Fund 3 has deployed approximately 83% of the total commitments and anticipates concluding one further investment in the next quarter, bringing Fund 3’s investment programme to a close. PAPE Fund Managers will begin raising Fund 4 imminently and will launch capital raising at the Super Returns conference in Cape Town in early December 2022.

Investors in PAPE Fund 3 include various South African pension funds and asset managers, a Netherlands-based development finance institution, and a pool of family offices.

PAPE Fund 3’s investment mandate is focussed on deploying capital into mid-cap unlisted South African domiciled or headquartered businesses wherein management are also significantly invested. In the case of Scamont, the management team holds more than 25% of the equity in the company.

Kubukeli said: “We believe strongly in South Africa’s industrial manufacturing and servicing competence especially in the mining environment. From the work our team has been doing over the last five years, we are of the view that we have world class and world-leading design and solutions businesses that have not had the expansion capital or appetite to take their products global. We bring an aspiration to take South African business to the world and have the capital to back that up within our funds… Scamont represents the attributes that we like to invest alongside: a young, ambitious, world class management team that is invested in the business; a market-leading and innovative product set; and strong financial performance metrics. We are excited at the opportunity to partner with this team and look forward to working with them.”