Editor’s note: African-Startups is a sister publication of EU-Startups, bringing trusted coverage of startups, venture capital, and innovation across Africa.
Creation Capital has listed a private credit fund in Cape Town aimed at closing a $21 billion (R350 billion) financing gap facing South Africa’s micro, small and medium enterprises. The Creation Yield Fund is among the first in the country to combine privately originated debt investments within a regulated, exchange-listed note structure.
It has a target size of $181.84 million (R3 billion), with an initial issuance of $18.19 million (R300 million) anchored by a large local pension fund. Proceeds will flow to small and medium enterprises and mid-market corporates through non-bank financial lenders.
Creation Capital, founded in 2017, describes itself on its website as “a dynamic asset manager, specialising in Private Credit solutions” whose goal is “to deliver consistent returns while fostering sustainable growth and a positive socio-economic impact”. The firm’s listed debt activities sit within a broader $606.16 million (R10 billion) debt note programme run by Creation Capital Investments (Pty) Ltd on the Cape Town Stock Exchange, with Creation Capital Services (Pty) Ltd acting as investment manager, the company’s website says.
“SMEs employ about 60% of the workforce in the country and contribute up to 40% to our gross domestic product but they’re struggling with a funding gap because banks still favour corporate lending quite heavily,” Kasief Isaacs, CEO of Creation Capital, told Bloomberg.
He added, “This fund is squarely aimed at starting to address that gap in a more structured and meaningful way, and it’s an opportunity for clients to generate higher returns because typically when you have a gap in the market, it’s easier to unlock alpha.”
Small and medium-sized businesses make up 91% of formal companies in South Africa, Bloomberg reported, but a shortage of funding, sluggish economic growth and high compliance costs are threatening their survival. Preliminary bank-lending data sourced from think tank Trade and Industrial Policy Strategies show credit skewed toward corporates, which collectively receive 51% of lending compared with just 13% for small and medium businesses.
The listing also comes against a backdrop of government promises to widen access to credit. Bloomberg noted that President Cyril Ramaphosa vowed in February to cut red tape, lower the cost of credit for smaller firms, and extend financial support and government guarantees to women- and youth-led enterprises this year.
The fund, which carries a minimum investment of $3.05 million (50 million rand), is designed to draw institutional capital from pension funds, insurers, high-net-worth individuals and family offices, Isaacs said. The listed note will pay semi-annual coupons over a 10-year tenor, with capital and returns redeemable at maturity.
The coupon payments are pegged at 1.5 percentage points below prime, which is currently 10.5%, with the note expected to generate a minimum return of about prime plus 0.5 percentage point, Bloomberg reported, citing the company.
It also noted that despite the 2025 collapse of US car-parts supplier First Brands Group and auto lender Tricolor Holdings, which rattled global credit markets, executives including Ninety One Plc CEO Hendrik Du Toit have argued that credit quality in emerging markets tends to be stronger than in developed economies, partly because a relative scarcity of capital has encouraged healthier lending standards.
