Caleo Capital, an international wealth and asset management business, has recently invested in and partnered with Secha Capital, a patient capital impact investment holding company that invests in established FMCG and agribusiness SMES in South Africa.
The partnership has established Secha Capital VCC, a 12J investment vehicle designed to grow South African SMEs, with the dual mandate to accelerate the growth of SMEs and to create sustainable jobs.
Nicholas Liebmann, Caleo Capital founder and CEO, said: “It has long been the goal of Caleo Capital to invest in the impact investing asset class. Our clients are excited by the opportunity to have direct exposure to SMEs with positive impact.”
“And we are excited to have found the right partner in Secha Capital, with Rushil Vallabh and Brendan Mullen leading the newly created vehicle. The design of our 12J is both returns and impact focused. Caleo and Secha will allocate investment capital into South Africa’s most promising SMEs and then the team will work side-by-side with the companies to help them grow,” he added.
Liebmann said that Caleo, together with their clients, is seeking investment opportunities that have positive social outcomes.
“However, this traditionally meant lower returns. Our partnership with Secha Capital upends the traditional model, we do good and expect high returns. And it is just the start—we intend to find more local, high-impact, low-risk, investment opportunities in which to allocate Caleo’s assets,” he said.
Section 12J is a tax incentive regime implemented by the South African Revenue Service and SA government to increase funding to small- and medium-sized businesses.
It allows companies, trusts and individuals to deduct 100% of the full amount invested in qualifying Venture Capital Companies (VCCs) from taxable income.
The Secha Capital VCC does not collect a management fee or a raising fee.
Rushil K Vallabh, Secha Capital MD, said: “We are thrilled and proud to partner with the team at Caleo Capital and to be aligned on the mission and vision: By working together, we can bring the capital, experience and network required to help grow South African SMEs.”
“Secha Capital VCC is the perfect platform to serve SMEs that have previously been ignored by the business community”, Vallabh continued “We provide capital, management expertise and market access – solving the top three pain points of most small businesses. We are confident that if we combine our experience from top-tier finance, consulting and industry with the entrepreneurial spirit, market knowledge, and grit of great SME founders, then we can create value for the investors and operators alike.”