South African investment firm Creation Capital has launched a listed private credit fund aimed at addressing the country’s estimated ZAR350bn ($21bn) funding shortfall for small and medium-sized enterprises, according to a report by Bloomberg.
The fund is one of the first vehicles of its kind to combine privately originated loans with an exchange-listed structure.
The Creation Yield Fund began trading in Cape Town on Wednesday with a target fund size of ZAR3bn and an initial issuance of ZAR300m, supported by a cornerstone investment from a domestic pension fund.
The vehicle will deploy capital to SMEs and mid-market companies through non-bank lenders, providing institutional investors with access to South Africa’s growing private credit market while expanding financing options for businesses that have historically struggled to secure bank lending.
According to Creation Capital, SMEs account for around 91% of formal businesses in South Africa, employ roughly 60% of the country’s workforce and contribute as much as 40% of GDP. However, the sector continues to face a significant financing gap as traditional lenders prioritise larger corporate borrowers.
Creation Capital chief executive Kasief Isaacs said the fund is designed to channel institutional capital into an underserved segment of the market while offering investors the opportunity to generate enhanced risk-adjusted returns through exposure to private credit.
The fund, which requires a minimum investment of ZAR50m, is targeting pension funds, insurance companies, family offices and high-net-worth investors seeking long-term income-producing assets.
Structured as a 10-year listed note, the vehicle will make semi-annual coupon payments, with investors receiving capital and accumulated returns at maturity. The coupon is expected to be set at 1.5 percentage points below South Africa’s prime lending rate, with the overall investment targeting minimum returns of approximately 0.5 percentage points above prime.
The launch comes as South Africa’s government seeks to improve access to finance for smaller businesses. Earlier this year, President Cyril Ramaphosa pledged reforms aimed at reducing regulatory barriers, lowering borrowing costs and expanding financial support programmes for SMEs, including women- and youth-led enterprises.
The new fund also reflects the continued expansion of private credit beyond North America and Europe, as institutional investors increasingly look to emerging markets for yield and portfolio diversification. Advocates of the asset class argue that tighter underwriting standards and structural capital shortages in many developing economies can create attractive lending opportunities with favourable risk-adjusted returns.
