[TOP STORY] Providing gap capital for student accommodation

[LISTEN] Tamela Capital Partners' Vusi Mahlanga on providing gap capital for student accommodation on MoneywebNOW Download the podcast

SIMON BROWN: I’m chatting now with Vusi Mahlangu. He is a partner at Tamela Capital Partners. Vusi, I appreciate the early morning time. You and your team recently provided some capital for student accommodation in Stellenbosch. This is purpose-built for students. I’m seeing a lot of it. I’m up here in in Johannesburg around Braamfontein, UJ and Wits, where a fair bit has been focused on dedicated student accommodation.

VUSI MAHLANGU: Absolutely. One of the things that’s quite interesting is that even in the height of the pandemic when students were not going on campus, and one would have expected them to want to go back home, actually they didn’t want to go back home.

VUSI MAHLANGU: That is correct. If you just think about South Africa in the world, debt or private debt is one of those asset classes gaining a bit of momentum. So we are not equity providers, but we are actually debt providers, and we require those entities or those businesses where the party has capital and the bank is willing to give them some capital – but there is a shortfall.

VUSI MAHLANGU: It’s a combination of both. On some of the transactions that we look at, the party will come to us and say, “I’ve raised 70% from the bank, so I need 30%. I’ve 10% of my own”. VUSI MAHLANGU: I think you’ve highlighted what I think is probably the more important aspect of what we do. I think there are two aspects: there’s the qualitative stuff and the quantitative stuff. I think in the quantitative everybody understands numbers and modeling. But the qualitative is where we spend a fair bit of focus and energy just trying to make sure, firstly, that we understand the space.

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