Rise of emerging managers

Access to growth capital remains a significant constraint for South African businesses. While traditional bank funding plays an important role, many growing businesses are caught between debt providers seeking established cash flows and larger private equity funds pursuing sizeable transactions. This “missing middle” has created both a structural funding gap and an investment opportunity. A new generation of emerging investment managers is stepping into this space, combining flexible capital with specialist expertise to support businesses through the next phase of their growth.

The Organisation for Economic Co-operation and Development (OECD) estimates South Africa’s SME funding gap at approximately R350 billion, even as the number of MSME funders grew from 148 to over 300 between 2018 and 2025. Many businesses remain underserved due to limited collateral, shorter operating histories, and business models that fall outside traditional lending criteria.

Emerging managers are increasingly distinguishing themselves through smaller funds and focused mandates. They can deploy minority equity, mezzanine finance, private credit and structured debt, tailoring solutions to a company’s stage of development. Their advantage lies not only in the flexibility of their capital, but also in the strategic and operational support that accompanies it. Many emerging managers are experienced investment professionals building independent firms around a clear investment philosophy. This founder-led approach creates closer alignment with entrepreneurs and enables managers to provide strategic guidance, strengthen governance and support sustainable growth.

South Africa’s private capital ecosystem is evolving in support of this model. The South African Venture Capital Association (SAVCA) membership exceeds 230 investment managers, advisers, and capital providers, collectively managing more than R237 billion across private equity, venture capital, and private debt. Research commissioned by SAVCA and Intellidex found that 87% of investee businesses experienced stronger growth following private capital investment, demonstrating the value of active partnership.

Global trends reinforce this shift. Investors are increasingly backing specialist managers alongside established platforms. Wafra recently closed its US$2 billion Capital Constellation fund, bringing total capital deployed to more than US$8 billion across 32 emerging managers since 2012. Similarly, GCM Grosvenor has invested with small and emerging managers for over 20 years and now manages more than US$20 billion with these managers, underscoring growing confidence in specialist, founder-led investment firms.

As South Africa’s private capital market evolves, the next phase of value creation will be defined not only by how capital is allocated, but by the strength of the partnerships supporting it. Emerging managers are no longer simply providers of capital; they are becoming strategic partners in sustainable business growth.

Tamela’s approach reflects this shift. Through its investment and mezzanine finance capabilities Tamela understands the importance of combining appropriately structured capital with active, long-term partnership. The firm stays engaged well beyond the initial investment, through board participation, ongoing monitoring, and continuous support, helping portfolio companies grow and build resilience. That commitment is visible in Afrihost’s shift to 84.6% solar power and expanded affordable connectivity, and in Bridgement’s funding of more than 1,000 SMEs.

For more information, reach out to Larisha Govind, Senior Analyst at Tamela on 011 7835027/Larisha@tamela.co.za.