Risk Capital

By Tshepo Magagane

Risk capital – why the US is so successful (Bezos’ take)!

NB: you would not have any of the S&P companies without this.

I have a friend who retired with good 9 figures in PE, and currently works with DACH family offices……told him what we are working on and he put the question to these various and the reply was just “we are focused on battery charging stations as our play on the transition”!

Me explaining that taking these early stage projects through into production could have a payback period of less than 2yrs in current pricing before any price moves did not matter!

Same with South Africa – deepest pool of capital in Africa; sophisticated banking system but try and speak to the LPs…have had to keep my temper in check over the years!

If we are thinking about Mining and then Africa, we are going to need a lot of risk capital…worse, time is running out!

Things such as blended finance are really what you say at conferences and then referring to a lower rate of interest on debt; that is not risk capital! For the avoidance of doubt, LOANS/DEBT IS NOT RISK CAPITAL – they have a specific contractual senior claim…

I sat in a Merchant Bank that advanced risk capital to all these producing projects you see, we stopped doing it due to B III…

…nothing replaced that…and that was even before the talk of the Transition Capital requirements!

Status quo cannot prevail if we are to prevail…and less talk and more action!

Take Dr Mulenga with Musama, he had to use USD10m of his own money to do the project whilst adhering to Equator, ICMM, IFC Principles…even he would tell you “a hard way to do a project without external risk capital”…we need new and innovative solutions as in like yesterday!

Why I have so much respect for what Kobold has achieved and excited by what this could open up re: solutions for African projects!