Venture capital, private equity sector ‘ thriving’ despite tough conditions

THE SOUTHERN African venture capital and private equity industry has proved to be resilient as it continued to raise funds locally and internationally.

Last week, the Southern African Venture Capital and Private Equity Association ( Savca) said it had seen more investors investing in private equity and venture capital funds.

Savca chief executive Tanya van Lill said the thriving private equity and venture capital industry was crucial for the region’s economic recovery post- Covid- 19.

Val Lill said private equity and venture capital industries grew investment in underlying companies in the region.

“They ( investors) do not only recognise the financial benefits, but also the socio- economic benefits that could be achieved,” Van Lill said. “The industry can achieve this growth going forward by offering good financial returns and remaining relevant to the changing context of the country.”

Savca said its 2020 survey showed that the private equity industry invested R25.4 billion, while the venture capital sector had R1.23bn invested last year despite a tough economic environment.

Private equity exhibited a considerable increase in investment activity, with R184.4bn in funds under management at the end of last year from R171bn in 2018. Savca said this represented a compound annual growth rate of 9.2 percent since it started its surveys in 1999.

The association said venture capital recorded robust growth last year, with venture capital investments showing the highest activity recorded to date.

It said a total of 38 exits were reported for 2019 – more than double the previous record for annual activity and just over triple the nine in 2018.

Van Lill said what was left was political and policy certainty for the region to attract more investments.

“Secondly, the fund managers themselves need to ensure they offer investors a compelling case to invest based on their investment strategy,” Van Lill said. “Each fund has a specific investment mandate to ensure there is alignment between investors and the fund.” This fund mandate speaks to the industries, geographies and types of companies they invest in, and the unique skills the fund team brings to the investment.”