Stability will allow for more private equity activity and create jobs

EXPERTS have predicted an increase in private equity activity in South Africa and the rest of sub-Saharan Africa this year because of stability on the economic and political fronts.

The 2017 Deloitte Africa Private Equity Confidence Survey (PECS), released last month, found that 2016 was expected to be the bottoming out of Africa’s adverse growth cycle.

Financial markets strategist and founding director of Antswisa Private Equity, Miyelani Mkhabela, said in a recent interview with Business Report that private equity raised R10.2billion in 2016, a significant decline from R27.5bn raised in 2015.

Mkhabela said in southern Africa private equity had R171.8bn in funds under management as at December 2016. “These funds are small and we need to make the global market have confidence in African private equity industry as that’s the only way to drive economic activity and create jobs.

“I believe with the recent political development in South Africa, private equity activity will increase. The presidency of Cyril Ramaphosa will bring more confidence to investors, as the market has already received him positively.”

He said there was growth of alternative investment globally that would also impact the emerging markets including South Africa. “Institutional investors globally manage more than $100trillion (about R1.2 quadrillion) of assets under management and Southern Africa private equity firms must collaborate to attract these funds to our markets.

“Private equity must prioritise on attractive project preparations, arrange championship teams and viable system models that will attract domestic and global institutional investors, commercial banks and philanthropic funders,” Mkhabela said.

Clinton Wolder, associate director corporate finance at Deloitte, said in an earlier interview with Business Report, that more stability would equal an improved outlook.

“The private equity industry in sub-Saharan Africa has a strong track record, depth of skills and access to capital. However, private equity funds will need to source quality assets without overpaying in a highly competitive environment,” he said.

Mkhabela said domestic pension funds should partner for development impact project that would create jobs such as manufacturing.