Media & News

SAVCA Newsletter | 7 April 2014

April 8, 2014

Africa’s turn for funds

Dear SAVCA members and friends

An inaugural study of limited partner perceptions of African private equity was launched last week. The report, entitled “The search for returns: Investor views on private equity in Africa”, was published by RisCura, AVCA and SAVCA, and distributed globally. The report is available on the SAVCA website, and some of the media coverage is included below.

A further research report will be made available this week: We’re launching the SAVCA-DBSA Economic Impact Study on Thursday morning 10 April. The highlight of the launch event will be the panel discussion with private equity fund managers, who will discuss case studies from their own experiences with the value-addition role of private equity. See you there!

The EY-AVCA Exits study, entitled “Broadening Horizons: How do private equity investors create value”, is available online. We’re grateful to SAVCA members who participated in this research.

SAVCA remains busy with various regulatory changes that affect private equity (more below). A notable development was the announcement by SARS last week that the signing of an intergovernmental agreement with the US tax authorities, regarding FATCA, is imminent. SAVCA members are urged to investigate their reporting obligations.

Do send us your news, including deal announcements, portfolio company exits, staffing changes and media mentions, and we’ll include these on the SAVCA website.

Regards

Erika van der Merwe
CEO: SAVCA

Regulation

FSB Category VI Licence for Private Equity: The SAVCA Regulatory sub-committee continues to interact with the FSB on the establishment of a dedicated FAIS licence category for private equity. SAVCA is confident of the FSB’s intention to move as efficiently as possible through this licence-creation process. During the course of the first half of this year we hope to provide the private equity industry with a draft version of the Category VI Code of Conduct for Private Equity, for comment.

FATCA: On 3 April 2014 the National Treasury and the South African Revenue Service (SARS) announced that the wording of the Intergovernmental Agreement (IGA) with the IRS has been finalised and that the IGA will be signed imminently. Further, and very importantly, on 2 April 2014 the US Treasury Department and the IRS announced that those jurisdictions that have IGA agreements “in substance” will be treated as having an IGA in effect with the US and will be included on the list of IGA jurisdictions. South Africa is one such jurisdiction and is, as such, now considered to have an IGA in effect. This gives certainty as to South Africa’s FATCA approach as an IGA jurisdiction, which has added importance considering that the FATCA effective date of 1 July 2014 is now less than three months away. SAVCA members are urged to engage advice on their FATCA implementation obligations, including the process of registration on the FATCA portal, the on-boarding of new clients, the due diligence review of pre-existing clients and the development of a necessary reporting system to facilitate the reporting obligation imposed under the IGA. In terms of the advice which SAVCA elicited for its members from KPMG, members need to note the following:

1. All Reporting Financial Institutions must register on the IRS Portal by 5 May 2014 (to ensure inclusion on the first FFI list to be published electronically by the IRS. Nevertheless, the IRS has given them until the end of 2014 to finally register.

2. All Reporting Financial Institutions must have implemented the client identification obligations, to enable the on-boarding of new individual clients and entity clients in line with the IGA requirements by 1 July 2014. Note, however, that unless you are raising a new fund, your obligation will currently most likely be limited to the retrospective review of pre-existing clients, which has delayed effective dates of 30 June 2015 and 30 June 2016, depending on whether the client is an individual (and whether a low-value or high-value client) or entity.

3. SAVCA is in discussions with SARS on the obligation to develop necessary reporting systems, and will be able to provide further feedback in the near future. However, we urge members to familiarise themselves with this onerous obligation.

Dividend Withholding Tax: SAVCA is engaging with SARS on the practical difficulties of dividend withholding tax being withheld at the level of the portfolio company. More practical solutions are being sought.

Section 23N: There were certain announcements in the National Budget regarding Section 23N of the Income Tax Act. SAVCA will continue to engage with National Treasury in this regard.

SAVCA events

SAVCA-King & Wood Mallesons SJ Berwin: LP Breakfast
Date : 8 April 2014
Venue : The Saxon Hotel, 36 Saxon Road, Sandhurst, Johannesburg
Registration for this event is closed

Launch: SAVCA-DBSA Economic Impact Study
Date : 10 April 2014
Time : 10:00am till 11:30am
Venue : Bowman Gilfillan, 165 West Street, Sandton
RSVP : By 8 April 2014
Registration is essential; please e-mail info@savca.co.za

SAVCA Member Workshop on Accounting, Reporting & Administration Systems
Date : 15 April 2014
Time : 8:30am- 12:30pm
Venue : To be announced: Owing to the extent of interest in this workshop, we are needing to move to a bigger venue
RSVP : info@savca.co.za by 10 April
All SAVCA Full Members welcome; registration is essential

SAVCA-GIBS Three-Day Foundation Programme in Private Equity
Dates   : 6-8 August 2014
Venue : Gordon Institute of Business: 26 Melville Road, Illovo, Johannesburg
Cost     : R8 500 for SAVCA members; R9 500 for non-members
Register here.  Book soon to benefit from the early-bird rate of R7 500 (till 5 May)