Och-Ziff-backed African fund ups stake in mining company

African Global Capital, a private equity fund backed by Och-Ziff, Palladino Holdings and Mvelaphanda Holdings, has agreed to up its stake in Coal of Africa from 9.1 percent to 26.4 percent for £138.75 million.

South African mining company Coal of Africa (CoAL) has agreed to issue 37.5 million new shares to African Management’s African Global Capital I fund for £48.75 million ($94.7 million; €61.4 million) or £1.30 per share. The company will also issue 50 million options exercisable at £1.80 within two years.

African Global Capital currently owns approximately 9.1 percent of CoAL. Following the agreed transaction, assuming the options are exercised, the fund will own a 26.4 percent stake in the company.

African Management, launched in January, is a joint venture between publicly listed alternative asset manager Och-Ziff Capital Management and two Africa-focussed investment firms, Palladino Holdings and Mvelaphanda Holdings (Mvela). African Global Capital was established to invest in public and private markets across the continent.

Mvela co-founder Mosima Gabriel Sexwale, known as Tokyo, is a multimillionaire, a former apartheid activist and was a political prisoner alongside Nelson Mandela. Despite having abandoned a political career nearly a decade ago, he is reportedly a contender to lead the African National Congress party, which could eventually lead to succeeding Thabo Mbeki as South Africa’s president.

Palladino was founded in 2003 with the aim to create a vehicle focussed on early-stage African resource, property and industrial projects, while Black Economic Empowerment (BEE) group Mvela was established in South Africa in 1998.

The private placement will ensure CoAL’s compliance with South African legislative requirements for BEE Groups to own at least a 26 percent equity interest in mining companies by 2014. The BEE program’s purpose is to redress the inequalities of apartheid by providing previously disadvantaged groups with economic opportunities.

African Global Capital previously purchased a 29 percent stake in South African gold mining and exploration company Aflease Gold, according to African news service AllAfrica.com.