Kholo Capital backs South African ICT distributor DCC with R275m

Kholo Capital Mezzanine Debt Fund I has provided R275 million (approximately US$17 million) in mezzanine debt to DCC Holdings, a South African distributor of ICT products with a logistics footprint spanning Southern Africa. The capital will refinance existing debt and fund DCC's next phase of expansion, with private equity firm Kleoss Capital remaining as the majority shareholder backing the business.

DCC, founded in 1988, sits at the junction of global technology manufacturing and the Southern African reseller market. Its portfolio spans personal computing, printing, enterprise infrastructure and software, with vendor relationships covering HP, Dell and Lenovo. The business connects those global brands to an extensive network of resellers, system integrators and retailers across the region, a distribution layer that, while unglamorous, is structurally critical to the region's technology adoption curve.

Mezzanine debt as a growth lever in frontier markets

The structure of the deal illustrates a financing pattern that is gaining traction in sub-Saharan Africa's mid-market. Mezzanine debt sits between senior bank lending and equity on the capital stack, offering companies access to growth or refinancing capital without the dilution of a straight equity raise. Kholo's instrument is designed as a four- to seven-year bullet-repayment facility, allowing DCC to service interest while deferring capital repayment and reinvesting cash flow into the business. The fund targets returns above 17%, combining fixed yield with potential equity upside, a profile that has attracted institutional limited partners looking for higher-yielding alternatives to listed African equities.

Mokgome Mogoba, Managing Partner and co-founder of Kholo Capital, framed the transaction as a proof of concept for structured capital in the region: "This transaction demonstrates how structured mezzanine debt capital can be used to optimise a company's capital structure, refinance existing debt and provide the financial flexibility required to support sustainable growth."

Kholo Capital is a R1.4 billion specialist fund whose investment team claims more than R50 billion deployed across over 90 transactions in more than ten African countries. The DCC deal sits within its stated range of R70 million to R205 million per investment, suggesting Kholo has syndicated or structured upward to reach the R275 million ticket, consistent with its disclosed capacity to bring in co-investors or use syndicated structures for larger transactions.

The macro read: private capital filling an infrastructure gap

For cross-sector strategists, the deal is a small but indicative data point in a larger story. Southern Africa's ICT distribution infrastructure is the unsexy backbone on which cloud adoption, enterprise digitisation and eventually AI-tool deployment in the region depend. Without resilient, well-capitalised distributors bridging global manufacturers and local channel partners, the region's technology modernisation stalls at the last mile.

Private credit funds like Kholo are increasingly filling a gap that development finance institutions (DFIs) and senior commercial banks have historically struggled to address: growth capital for established, cash-generative mid-market businesses that are too large for microfinance and too small or too regional for global private equity. The Kholo-DCC deal is part of a discernible expansion of this asset class across the continent, as international limited partners seek yield in alternative credit at a time when developed-market rate cycles are compressing traditional fixed-income returns.

The social-impact framing in Kholo's mandate, sectors including healthcare, education, telecommunications and renewable energy, also reflects the growing influence of impact-aligned capital in directing private credit flows in emerging markets. DCC's own commitments to youth employment, support for learners with disabilities and SME reseller development are cited as factors consistent with that mandate. Whether those commitments translate into measurable outcomes will be a question for the fund's limited partners as the investment matures.

The immediate question for the Southern African ICT market is whether DCC's refinanced balance sheet and fresh capital headroom translate into accelerated vendor expansion or geographic reach, the two levers most likely to shift its competitive position in a distribution market where scale and logistics density determine margin.