The first close of capital acceptance is in sight for the new junior mining fund launched earlier this year by Aluwani Capital Partners, the independent black-owned investment management business that aims to make a lasting impact in South Africa and the rest of the African continent.

Capital acceptance from investors will begin on July 1 and close on September 30.

“We’ve done our roadshow and we’ve got a good idea of the type of investors that are going to come in. At this stage, the main one is external, but we’ve also received good local feedback. We’re looking to deploy the first capital in the third quarter of this year,” Aluwani CEO and founder Sibusiso Mabuza told Mining Weekly in an exclusive interview last week.

Incoming funds have been capped at R5-billion for investment in potentially eight to ten opportunities, with coal at the top of the list and including iron-ore and vanadium.

“We think there are nice opportunities for our clients to make good returns, but we also think the stars are aligned in a way because South Africa needs investments of this type right now. If we can create jobs, if we can improve the macro- economic environment, we can also feel good about the investments that we make. We can also be a lot more responsible about our impact on the environment. It’s been an interesting learning curve,” said Mabuza.

Good-quality coal opportunities are presenting themselves in the Waterberg region and consideration is being given to consolidating operations so that meaningful investment can be forthcoming.

Opportunities involving lower coal qualities have also been identified in Mpumalanga, where consolidation of small participants is envisaged.

“We’ve been surprised by the number of players looking for capital. Ideally, we want partners that we can capacitate to run the operations and then buy us out, because, ultimately, our clients are not permanent mining investors. They’re investing because the opportunity set makes sense. So, we’re always thinking about an exit strategy, while the existing miners are looking for the upside almost in perpetuity,” said Mabuza, who envisages end-to-end, pit-to-port investment involving mainly exportation of coal to China and India.

Aluwani’s investments will, in the main, be a mix of private equity and debt, with exit envisaged after seven to ten years. With opportunities found to be too small for private-equity positions, the company will proceed with appropriate debt positions.

To mitigate risk, controlling stakes will be targeted until the company is comfortable that its partners are able to take the companies forward on their own.

The 42-employee Aluwani, which has more than R57-billion in assets under management, was created out of the unbundling of Momentum Asset Management in 2015, when Mabuza, 42, a former CEO of Momentum Asset Management and then CEO of MMI Investments, created Aluwani, a fiduciary business that invests on behalf of clients and in which MMI is a minority shareholder.

In February, its mining fund was launched on the sidelines of the Mining Indaba, in Cape Town, to make capital accessible to mainly capital-constrained junior mining companies.

“We were established on a foundation of strong partners that are committed to building a sustainable and trans- formative business,” says the website of the company, which will operate its mining fund in partnership with VM Investment Company and the Ntonga group.