Investors cautiously optimistic about deals
Political climate and finding experienced local partners for strategic investments remain the key factors in the continent
Sa-based private equity (PE) players are scanning the African continent for deals, but local economy and currency slumps have left value hard to come by.
Clinton Wolder, associate director of corporate finance at Deloitte, which acts as SA Venture Capital Association’s (Savca) research partner and produces its own PE confidence survey, says the mood of the industry can be summed up as cautious optimism about finding the right deal at the right price, both within and outside SA.
“We think favourable political moves to drive investment growth will have a positive impact on activity. That optimism also holds for the West and East Africa regions, with East Africa more favoured. Despite pending elections and a wait-and-see approach in West Africa, we’re still expecting growth in investment activity in 2019, and countries such as Ivory Coast and Ghana being targeted for investments,” he says.
Wolder says demand remains strong and pricing at attractive multiples can be found, the issue for most Sa-based PE players entering foreign territories has been finding experienced local partners for strategic investments, seen as the best entry route.
Jacci Myburgh, Head of Private Equity at Old Mutual Alternative Investments, says investments in Africa tend to involve more goals than simply making cash. “We’re committed to making a positive impact with investments that support the sustainable development of the communities and environment we operate in. As well as building value for our stakeholders we strive to create the jobs and wealth that stimulate further economic growth in Africa.”
Savca CEO Tanya van Lill believes the SA PE industry’s focus on value creation comes from its traditional roots in being funded or birthed by development finance institutions. “For this reason, local PE firms have always had their ESG hats on, in terms of evaluating and reporting broader goals, and I think Africa is ahead of other PE regions in this space.”
In terms of empowerment in the SA PE sector, RMB Ventures (RMBV) co-head Andrew Aitken says empowerment transactions are definitely increasing in number. “RMBV has been very active in this space, involved with the birth of black-controlled PE firms including Bopa Moruo, Sigma Capital, Pan African Capital Holdings, Kagiso and Tiso.”