This week, the Southern African Venture Capital and Private Equity Association (SAVCA) released its 2017 Private Equity Industry Survey covering the 2016 calendar year.
The report, which provides some of the most comprehensive and authoritative analysis of private equity in Southern Africa, showed that private equity funds under management had grown to R171.8bn (US$13.2bn), up from 158.8bn ($12.1bn) in 2015, while R18.3bn ($1.4bn) of capital was returned to investors, an increase of 123.2% on 2015. Following a record year in 2015, funds raised in 2016 were R10.2bn ($0.8bn), a fall of nearly 63% on 2015 where R27.5bn ($2.1bn) was raised.
Paul Boynton, Chief Executive Officer of Old Mutual Alternative Investments (OMAI), comments on the SAVCA 2017 report and the health of the Private Equity industry in South Africa:
“As a SAVCA member, we recognize that following the record year in 2015 for private equity investments, 2016 has been more challenging when it comes to finding investment opportunities that deliver attractive returns for investors and creates the houses, schools, roads, power plants, thriving new businesses and, of course, the jobs that are so vital for the country’s future prosperity.
“Private equity plays a vital role in contributing to economic growth. By its very nature, private equity is a longer-term financial commitment, usually of five to seven years or more, which enables our industry to deal with the economic and industry cycles, including downturns, that are inevitably part of any investing programme.
“Despite some of last year’s challenges, OMAI’s various investment teams of highly experienced investment managers who know their sectors inside and out managed to identify some exciting investment opportunities
“In particular, under our Schools and Education Investment Impact Fund South Africa, we allocated a total of R380m ($30m) to Barnstone Education and to building six Prestige Colleges.
“We also took a significant minority stake in In2food, a leading convenience food manufacturing business with demand for food tending to remain steady and quite well protected during times of economic stress.
“Our Old Mutual Retirement Accommodation Fund finalized two new investments including investments in a freehold and sectional title retirement development at the foot of the magnificent Zevenwacht wine estate, close to Stellenbosch, and the last phase of the Featherwood Retirement Estate in Pretoria.
“And finally, last year we had a significant divestment of our interest in three private toll road concessions in Southern Africa. This sale represents the largest private equity realization for toll road infrastructure in Africa to date.
“All in all, despite sluggish growth in the overall economy, we remain focused on identifying investment opportunities that will deliver appropriate returns over the longer term."