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The South African Private Equity Industry (including SME Funding)
BY Carole Veitch
South Africa
27 March 2020
R 14 400.00 (ZAR)  
estimated $ 880.16 (USD) *
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The South African Private Equity Industry (Including SME Funding)


Southern African private equity funds under management grew at a compound annual rate of over 9% over the past two decades. Private equity investments generate financial returns for investors and play a role in stimulating the economy and job creation. Although private equity continues to attract investors seeking access and exposure to unlisted companies with high growth prospects, the asset class remains under-utilised.


Limited Allocation


While investment opportunities are plentiful in South Africa, the fundraising environment remains extremely challenging, particularly for early stage funds. Role players say that in addition to the unfavourable economic environment, many prospective investors still have a relatively limited understanding of the value of private equity and venture capital. Local pension fund allocations to private equity funds are around 5%, well below the 10% threshold.


SME Funding


Section 12J legislation aimed at stimulating private investment in startups and SMEs by providing tax relief has seen a marked increase in approved 12J venture capital investments. The legislation, which contains a sunset clause ending tax deductions in 2021, is under review. The industry is lobbying Treasury for an extension as these investments have incentivised investment into SME development, which stimulates the domestic economy and helps to create jobs.


Report Coverage


This report focuses on the South African Private Equity Industry and includes comprehensive information on the state and size of the industry, influencing factors, corporate actions and issues affecting SME funding. There are profiles of 45 companies including private equity players such as Ethos, Actis, African Rainbow Capital, Brait and Metier. Other profiles include government-owned Industrial Development Corporation and the National Empowerment Fund, industry participants in the SME space such as AngelHub Ventures and Newtown Partners, and Section 12J companies such as Westbrooke and Grovest.


Page
1. INTRODUCTION 1
2. DESCRIPTION OF THE INDUSTRY 1
2.1. Industry Value Chain 4
2.2. Geographic Position 5
3. SIZE OF THE INDUSTRY 6
4. STATE OF THE INDUSTRY 9
4.1. Local 9
4.1.1. Corporate Actions 11
4.1.2. Regulations 13
4.1.3. Enterprise Development and Social Economic Development 16
4.2. Continental 20
4.3. International 23
5. INFLUENCING FACTORS 26
5.1. Economic Environment 26
5.2. Pension Fund Investment 26
5.3. Infrastructure Investment 27
5.4. Responsible Investing 27
5.5. Impact Investing 28
5.6. Labour 29
5.7. Technology, Research and Development (R&D) and Innovation 30
5.8. Cybersecurity 30
6. COMPETITION 31
6.1. Barriers to Entry 31
7. SWOT ANALYSIS 32
8. OUTLOOK 33
9. INDUSTRY ASSOCIATIONS 33
10. REFERENCES 34
10.1. Publications 34
10.2. Websites 34
APPENDIX 1 36
Private Equity Deals in 2019 36
APPENDIX 2 39
Summary of Notable Players 39
COMPANY PROFILES 50
ACORN PRIVATE EQUITY (PTY) LTD 50
ACTIS AFRICA LTD 52
AFRICAN RAINBOW CAPITAL INVESTMENTS LTD 54
AGILE CAPITAL (PTY) LTD 57
ANGELHUB (PTY) LTD 59
BOXCARS DOZEN (PTY) LTD 60
BRAIT SE 62
BUSINESS PARTNERS LTD 64
CAPITALWORKS INVESTMENT PARTNERS (PTY) LTD 69
DEVELOPMENT BANK OF SOUTHERN AFRICA 71
DEVELOPMENT PARTNERS INTERNATIONAL LLP 74
EDGE GROWTH BUSINESS DEVELOPMENT (PTY) LTD 76
EPE CAPITAL PARTNERS LTD 78
ETHOS PRIVATE EQUITY (PTY) LTD 81
EXEO CAPITAL (SA) (PTY) LTD 84
GROVEST VENTURE CAPITAL COMPANY (PTY) LTD 86
HARITH GENERAL PARTNERS (PTY) LTD 88
HORIZON EQUITY PARTNERS (PTY) LTD 91
HULISANI LTD 92
INDUSTRIAL DEVELOPMENT CORPORATION OF SOUTH AFRICA LTD 95
INTEL SOUTH AFRICA CORPORATION 106
INTERNATIONAL FINANCE CORPORATION 108
KALON VENTURE PARTNERS LTD 111
KNIFE CAPITAL (PTY) LTD 113
KZN GROWTH FUND TRUST 115
LEBASHE INVESTMENT GROUP (PTY) LTD 118
LEREKO INVESTMENTS (PTY) LTD 120
LUCID VENTURES (PTY) LTD 123
MINEWORKERS INVESTMENT COMPANY (RF) (PTY) LTD 124
NATIONAL EMPOWERMENT FUND TRUST 127
NEDBANK LTD 132
NESA VENTURE CAPITAL INVESTMENTS (PTY) LTD 141
NEWTOWN PARTNERS (PTY) LTD 143
NOVARE EQUITY PARTNERS (PTY) LTD 145
OLD MUTUAL PRIVATE EQUITY (DIVISION OF OLD MUTUAL INVESTMENT GROUP (PTY) LTD) 147
PALLIDUS HOLDINGS (PTY) LTD 149
PEMBANI REMGRO INFRASTRUCTURE MANAGERS (PTY) LTD 151
PUBLIC INVESTMENT CORPORATION SOC LTD 153
REMGRO LTD 161
RH BOPHELO LTD 166
RMB PRIVATE EQUITY (PTY) LTD 168
ROCKWOOD PRIVATE EQUITY (PTY) LTD 170
SANLAM PRIVATE EQUITY (DIVISION OF SANLAM INVESTMENT MANAGEMENT (PTY) LTD) 172
SASFIN CAPITAL (PTY) LTD 174
WESTBROOKE ALTERNATIVE ASSET MANAGEMENT (PTY) LTD 176