Private equity’s capital penetration, or capital injected into the economy through private investments, was equal to 0.7% of GDP in 2017, and the sector is an important role player in the development of companies and infrastructure projects in the country. South Africa’s private equity industry had R158bn in funds under management in 2017. The volume and value of private equity and venture capital deals targeting South African companies declined year-on-year in 2017 with 43 deals worth a combined US$312m, compared to the US$896m invested across 60 deals in 2016. In terms of value, 2017’s results were the lowest since 2010. Private equity continues to outperform listed equity.
The relatively expensive level of equities on the Johannesburg Stock Exchange, regulatory acceptance of investment by South African pension funds in private equity funds, government’s renewable energy programme, the need for banks to reduce their loan books, infrastructure requirements and the economic growth enjoyed by some sub-Saharan African countries are fuelling renewed interest in private equity investment. While the recent focus has been on deploying rather than raising funds, the decline in fundraising is a concern to industry role players.
The Private Equity report describes important changes and key developments, current conditions, recent merger and acquisition activity and factors influencing the success of the industry. The report profiles 25 public and private companies including the Public Investment Corporation, Ethos, Brait, African Rainbow Capital, Lereko and the private equity arms of major fund managers including Old Mutual and Sanlam.