BILLIONS READY FOR PRIVATE EQUITY DEALS
THE JSE SHOULD expect more private equity deals, judging by figures released in New York. One major player – Citigroup – has already announced that it has earmarked US$ 200m ( R1,45bn) especially for Africa. It’s expected that the bulk of that money will find its way to SA.
Emerging markets really came into their own for the first time last year in terms of takeovers and other private equity transactions. That was seen in SA with, for example, Edcon, which is being targeted by foreign investors. Although by far the majority of the transactions take place in Europe and the US, more than $ 22bn ( around R160bn) was invested in Asia, Latin America and, to a lesser extent, in Africa.
Figures released by the Emerging Markets Private Equity Association show that this represents an increase of nearly 550% in four years. That another large increase can be expected this year is shown by a survey among major players: more than 60% have already decided to increase investment in the emerging world because such good returns can be earned. US research group Cambridge Associates reports that the emerging markets last year showed an average return of 25%, as against around 9% in the US.
But there’s another phenomenon that should gain momentum this year; companies in several emerging countries are so successful that they themselves are entering the international market. Especially in the case of the big guns, such as China and Brazil, there are large sums of capital in search of a profitable home. And SA – with its well- developed financial markets – is also seen as potentially a serious player.