And in the private equity (PE) environment, it’s a popular sector for investments. According to the 2021 Southern African Venture Capital and Private Equity Association’s (SAVCA) Private Equity Industry Survey, infrastructure investments accounted for 22.8% of the total cost of investments for the 2020 period.

Furthermore, infrastructure-focused private equity funds have been attracting an increased share of the pie over the last three years. In 2018, 14.7% of total private equity funds under management was invested in infrastructure-focused PE funds. In 2020, this figure increased to 33.4%.

But where should South African (SA) investors be looking to deploy capital – on domestic shores or on the rest of the continent?

A panel of experts debated this fervently at the recently held SAVCA Private Equity conference in Paarl, Western Cape.

SA’s familiar regulatory environment is attractive…

Speaking for the South Africa team, Kasief Isaacs, Senior Investment Principal (Private Markets): Mergence Investment Managers highlighted South Africa’s well-established regulatory environment as in important factor. He said: “One of the biggest drivers behind our deployment of capital into South African infrastructure is the predictability and certainty associated with our regulatory framework.”

Makole Mupita, Co-Founder: Mahlako Financial Services & Fund Principal: Mahlako Energy Fund agreed and pointed to the willingness of the regulator and policy makers who engage with the industry as an indication of the favourable regulatory environment.

…but understanding other countries’ regulations can be done

Bame Pule, Founder and CEO: Africa Lighthouse Capital who argued for the rest of the continent suggested that it’s not impossible to get to grips with the regulatory environment in other countries. “It’s good that we invest in South Africa because we understand how things work here. However, we can develop such an understanding of other African markets, we just need to take the time to undertake market research and work with local investors,” he said.

He also highlighted that many of the infrastructure investors in Africa are international, which should give South African investors a degree of comfort that any disputes will be settled in jurisdictions that are well known and transparent. This also provides a hard currency underpin that isn’t necessarily available in South Africa.

The panel in support of investment into the rest of Africa dispelled the notion that the rest of the continent is a wild frontier that no one has ventured to before and pointed to a long history of public-private partnerships.

Infrastructure is about more than just energy

While there can be no doubt that energy infrastructure is urgently needed in South Africa in particular, the panellists agreed that there are other types of infrastructure that are desperately required to boost economic growth across the continent.

Isaacs mentioned affordable housing and water as attractive areas in need of investment, not least because he quoted that 6 million South Africans are expected to move to cities over the next 10 years. According to Isaacs, there are plenty of opportunities here in SA and these are not confined to energy. He said: “Even beyond energy, the opportunities in South Africa are vast and readily accessible.”

Pule was similarly optimistic about opportunities outside of the energy sector across the rest of the continent: “We’re expecting to see much more non-energy investment, especially in the transport sector,” he said.

Transport was also an area identified by Vuyo Ntoi, Co-Managing Director: African Infrastructure Investment Managers, who pointed to new toll roads being built. He put forward that the urbanisation rate in the rest of Africa is expected to be greater than that of India and China combined. He said that this means there are opportunities for investments in port logistics and the cold storage chain.

Working together

However, perhaps it’s not about choosing one over the other in terms of South Africa versus the rest of the continent – maybe there shouldn’t be a wrestling match for funds. After all, South Africa is in Africa and it can’t be denied that infrastructure needs are common to all African countries, even if priorities are different.

Lizeka Matshekga, Head of Implementation: Harith General Partners said: “I don’t see the split [between SA and the rest of Africa]…I see us working together and complementing each other. It’s more about the partnership.”

Ntoi echoed the sentiment towards collaboration. “To some extent, the debate is moot because we should all be encouraging investment into infrastructure, period. And making it easier for trustees to understand how infrastructure investment in both South Africa and the rest of the continent can be additive to a portfolio,” he said.

More flows going forward?

With the amendments to Regulation 28, which enable pension funds to allocate up to 45% to infrastructure, there is hope that the asset class will see more inflows going forward.

For Fulu Makwetla, Managing Director: Third Way Investment Partners, this seems likely. “The lack of returns available from other asset classes combined with the increase in allocation means pension funds can’t ignore allocating to infrastructure,” she said.

Making the case for domestic infrastructure investment and how it stands to directly benefit society and the economy, she said: “As a member of a pension fund with liabilities in South Africa, I would like to retire in an SA that is sustainable – where there are hospitals and shops near where I live, tarred roads and education facilities for my children and grandchildren.”

Tanya van Lill SAVCA CEO concluded: “It’s clear, whether deploying capital in SA or further afield on the rest of the continent, there are growth opportunities to be found in infrastructure investing. It is one of the most effective assets with which to diversify a portfolio and contribute to the growth of an economy.”

The post The Great Debate: Infrastructure Investing in SA vs the Rest of the Continent appeared first on SAVCA.

Tanya van Lill, outgoing SAVCA CEO, noted the dynamism evident in the conference room. “It’s clear that even after two years of no in-person conferences industry players remain as committed to, and enthusiastic about, the industry,” she said. “There has always been so much passion and camaraderie at SAVCA conferences, and this event was no different. It’s extremely encouraging to see that this energy hasn’t waned over time; in fact, the absence of conferences in the last two years may have served to strengthen the industry’s hunger for collaboration even further.”

Commenting on the industry’s relative resilience for the 2021 period, Lelo Rantloane SAVCA Chairman and Executive Director & Chairman of Investment Committee at Ata Capital said: “Despite the difficulties and uncertainties, funds were raised and deals were done.”

This can be attributed to the industry’s “fluidity”, which was the conference theme. The term references the constant change the world is experiencing and the need to adjust to ongoing uncertainty and variability. Having the ability to smoothly adapt to the changing environment is crucial to staying relevant – a characteristic that PE players embody.

Turn the tide

The first keynote address was delivered by Peter Attard Montalto, Director & Head of Capital Markets Reserve: Intellidex. In keeping with the fluidity theme, he discussed the various macroeconomic tides working against our economy such as inflation and the withdrawal of global liquidity – and explored some of the ways in which we could turn these tides such as addressing the energy constraints South Africa faces faster with new ways of procuring energy.

In Conversation with the Competition Commission

The second session saw Langa Madonko, Investment Principal: Summit Africa in conversation with Hardin Ratshisusu, Deputy Commissioner: Competition Commission of South Africa. The pair discussed how the Competition Act and the Commission are charged with the unique task of balancing competitive market forces and South Africa’s various socioeconomic goals. This candid conversation unpacked many of the challenges South Africa faces as a country, and the role private equity could play in closing the socioeconomic gaps we face as a nation.

The Fluidity between Investing for Climate Change and Social Impact

Day two of the conference opened with a panel discussion consisting of Louise Naudé, Programme Manager: WWF South Africa; Todd Micklethwaite, Head of Strategy & Impact: Sanlam Investments (Alternatives); Kathryn Fletcher, Director: Control Risks and Nathaniel Nyika, CIO: Norsad Capital. The panel was moderated by Terry Wyer, Senior Vice President of Investment Programs: Heifer Impact Capital.

While some panellists believe social impact should be prioritised ahead of environmental considerations, others agreed that the two issues can’t be separated and in fact go hand in hand. It was posed that the apparent tension is a false dichotomy – that the real tension lies between inaction and the opportunities that come from action.

The panellists were aligned on their view that while climate change and social issues pose serious risks, there are also plenty of investment opportunities associated with addressing them. The panel concluded with an agreement that the transition to net zero in South Africa needs to be a just transition that doesn’t come at the expense of the livelihoods of those working in fossil fuel industries. The capital set aside for us at COP26 will help us achieve this.

While there are huge challenges that lie before us, there are also plenty of investment opportunities and ways to fight climate change while also having a positive social impact.

Infrastructure Debate: Team SA vs Rest of Continent

Delegates also heard from an engaging panel which debated the merits of infrastructure investment in South Africa versus the rest of the African continent. This “wrestling match” was moderated by Peter Attard Montalto.

The panel in support of SA investment consisted of Makole Mupita, Co-Founder: Mahlako Financial Services & Fund Principal: Mahlako Energy Fund; Kasief Isaacs, Senior Investment Principal (Private Markets): Mergence Investment Managers, Dr Anthony Costa, Investment Lead: RSA Presidency and Fulu Makwetla, Managing Director: Third Way Investment Partners.

They pointed to the benefits of South Africa’s mature and familiar regulatory environment, which offers investors an element of predictability and certainty compared to the rest of the continent.

The “rest of continent” panellists included Lizeka Matshekga, Head of Implementation: Harith General Partners; Hugh Hawarden, Head of Infrastructure: Ashburton Investments; Vuyo Ntoi, Co-Managing Director: African Infrastructure Investment Managers and Bame Pule, Founder and CEO: Africa Lighthouse Capital.

The group argued that given Africa’s rapid urbanization, infrastructure needs are widespread and urgent. They also laid to rest the idea that the continent is a wild frontier and pointed to a long history of public-private partnerships.

It was evident that there are meaningful benefits to infrastructure investing, including its ability to diversify a portfolio, and that compelling infrastructure investment opportunities exist both in SA and across the continent.

Global Private Equity Trends

Also on the agenda was a discussion about some of the latest global PE trends. A pre-recorded message from William J. Kelly, President & CEO: CAIA and Elana Manola-Bonthond, CEO: CERN Pension Fund suggested there is international optimism about the opportunities available to PE investors looking for alpha and positive returns in Africa, with a bigger focus on environmental, social and governance (ESG) requirements.

Andile Khumalo, CEO: KhumaloCo moderated the discussionbetween Christopher Mauss, Member of Management: Partners Group; Edmund Higenbottam, Managing Director: Verdant Capital and Elliot Refson, Head of Funds: Jersey Finance. Trends they identified included an increase in allocation to alternatives, particularly PE, and greater regulatory pressure which is resulting in increased compliance costs. They also noted a trend in the establishment of smaller specialised PE funds that can make a real impact and drive operational efficiencies through a focused strategy.

Portfolio Management and Value Creation in Difficult Economic Times

Sihle Gumede, Principal: Sanari Capital took to the stage to moderate a panel consisting of Joao Rodrigues, Operating Partner: Ethos Private Equity; Janice Johnston, Partner: Identity Partners and Michael Railton, Principal: Kearney. Johnston highlighted how volatility can create real and perceived risks to investee companies. “Creating relationships, understanding the underlying fundamentals and assisting the company with communicating this to their various key stakeholders, can help with navigating turbulent times,” she said.

Ensuring a high level of product differentiation and a diversified supply base came through as important ways to create value too.

Poised for growth

In closing SAVCA Chairman Lelo Rantloane paid an emotional tribute to outgoing SAVCA CEO Tanya van Lill, praising her leadership and the role she’s played in developing the industry. He also emphasised that the industry has remained resilient throughout the ebb and flow of global challenges over the past two years and has emerged strong, while being well poised for a new growth phase. “The industry presents many opportunities to positively affect socioeconomic development.”

The post Positive outlook for the PE industry’s impact on SAs socioeconomic development appeared first on SAVCA.

SAVCA CEO, Tanya van Lill says that the new appointees – Natalie Kolbe, Partner at Actis and Sthembile Nkabinde, Founder and CEO of Khulasande Capital – are both leading industry professionals who have been elected by their peers to continue driving the association’s strategic objectives.

“Natalie and Sthembile each bring with them a unique skill set that will complement those of our existing board members, while bringing new perspectives and ideas to the table. Notably, the new board composition of seven women and six men are representative of the advances being made by the broader industry within the area of transformation and diversity.”

As noted by the recent SAVCA 2020 Private Equity Industry Survey, South African private equity exhibited a considerable increase in investment activity in 2019, with the private equity industry having R184.4 billion in funds under management (FUM) at 31 December 2019, up from R171 billion in 2018, representing a compound annual growth rate (CAGR) of 9.2% since 1999 when the survey first began.

Similarly, the SAVCA 2020 Venture Capital Industry Survey reported robust industry growth in 2019, with venture capital investment showing the highest activity recorded to date, both by value and by number of deals. A total of 38 exits were also reported for 2019 – more than double the previous record for annual exit activity, and just over triple the nine exits reported in 2018.

“This industry growth bodes well for the future economic growth of the region, especially considering the long-term effect that COVID-19 is having on economic activity,” says van Lill, who notes the important role that the industry plays in Southern Africa’s broader economic environment. “A thriving private equity and venture capital industry is crucial for Southern Africa to accelerate its economic recovery.”

Returning to the outcomes of the recent AGM, van Lill says that the SAVCA board is sadly bidding farewell to three distinguished directors: Lungile Mdluli, who served as Treasurer and Chairperson of the Fiscal Committee from 2017 and was asked to stay on for another year to hand over the role of Treasurer; Vusi Thembekwayo, who joined the SAVCA Board in 2017 and served on the Venture Capital Committee; and Craig Dreyer, who has served SAVCA since its inception in 1998 and notably chaired the association over the past three years.

“Through their varied and distinguished roles, Lungile, Vusi and Craig contributed significantly to the success of our organisation by dedicating an invaluable amount of time and expertise to the board activities. While Craig’s longstanding commitment to the industry and relentless contribution as Chairperson and member of the Regulatory Committee will be missed, we are fortunate for the legacy he leaves behind and want to thank all three members for the roles they’ve played in shaping the future of the industry,” van Lill concludes.

-Ends-

About SAVCA
The Southern African Venture Capital and Private Equity Association (SAVCA) is the industry body and public policy advocate for private equity and venture capital in Southern Africa. SAVCA represents in excess of R185 billion in assets under management through 170 members that form part of the private equity and venture capital ecosystem. SAVCA promotes the Southern Africa venture capital and private equity asset classes on a range of matters affecting the industry, providing relevant and insightful research, offering training on private equity and creating meaningful networking opportunities for industry players.

For more, visit our website: http://www.savca.co.za/
Follow us on Twitter @SAVCAssociation and LinkedIn

The post MEDIA RELEASE| SAVCA APPOINTS TWO NEW BOARD MEMBERS appeared first on SAVCA.

The 2019 fourth quarter report, which tracks a representative basket of private equity funds in South Africa, shows outperformance across all three listed benchmarks over the five-year period. Over the three-year and 10-year periods, private equity underperformed across all three listed benchmarks.

The direct alpha earned by private equity relative to the ALSI TRI, FINDI TRI and the SWIX TRI is 2.9%, 3.8% and 3.9%, respectively, over the five-year period. At Q3 2019, these results were comparable at 4.6%*, 3.4%* and 5.1%*, respectively.

SAVCA CEO, Tanya van Lill, says that South African private equity continues to deliver value for investors. “Results for the first and second quarters of 2020 will be telling, but we believe that private equity will remain resilient relative to the listed market.”

According to the report, the 10-year ZAR IRR remained flat at 8.8%* in Q4 2019 as compared to Q3 2019, and declined by 90 basis points as compared to Dec18 (9.7%*). The five-year ZAR IRR declined from 10.1%* in Q3 2019 and 10.5% in Q4 2018 to 8.8% in Q4 2019. The three-year IRR improved by 40 bps to 4.4% in Q4 2019 from 4%* in Q3 2019 and Q4 2018.

The 2007-2008 vintage funds have seen an improvement in their performance since last quarter, ending the quarter at an IRR of 8.7%, compared to 8.6%* in Q3 2019 and remained flat as compared to Q4 2018. The 2010-2012 vintage funds reported an IRR of 3.2%, down from 4.1% in Q3 2019 and 4.3% in Q4 2018. The 2013-2015 vintage funds improved from an IRR of 9.4%* in Q3 2019 and 9% in Q4 2018 to 12.4% in Q4 2019.

The USD IRR improved over the three-year, five-year and 10-year periods, reaching 3.6%, 4.4%, and 1.7%, respectively, up from 0.8%*, 3.7%*, and 1.3%*, respectively in Q3 2019. The USD IRRs across all periods improved due to the ZAR strengthening by approximately 7.7% against the USD from Sep19 to Dec19.

Monwabisi Zikolo, a senior private equity analyst at investment firm RisCura, says that despite significant headwinds, the prospects for private equity investments remain favourable.

*The Dec18 and Sep19 IRR’s have been restated due to a realisation that was double-counted.

-ENDS-

About SAVCA                                                                                                                                              

The Southern African Venture Capital and Private Equity Association (SAVCA) is the industry body and public policy advocate for private equity and venture capital in Southern Africa. SAVCA represents about  R184 billion in assets under management through 170 members that form part of the private equity and venture capital ecosystem. SAVCA promotes the Southern Africa venture capital and private equity asset classes on a range of matters affecting the industry, providing relevant and insightful research, offering training on private equity and creating meaningful networking opportunities for industry players.

For more, visit our website: http://www.savca.co.za/

Follow us on Twitter @SAVCAssociation and LinkedIn

About RisCura

RisCura is a global, independent investment advisor and financial analytics provider that offers investment decision support in developed and emerging markets. RisCura provides a wide range of services to the largest African investor base in listed and unlisted investments on the continent. The company services institutional investors, asset managers, hedge funds and private equity firms with over USD200 billion in assets under advice.

For more, visit our website: www.riscura.com

The post PRESS RELEASE| SA PRIVATE EQUITY REMAINS FAVOURABLE RELATIVE TO LISTED MARKET appeared first on SAVCA.

This is according to Tanya van Lill, CEO of the Southern African Venture Capital and Private Equity Association (SAVCA), who was speaking at the survey launch last night. “There’s no denying that the first half of 2020 has been a total whirlwind, but this latest survey – albeit based on 2019 data – provides useful insight into industry trends and signals the valuable role that private equity will play in the region’s economic recovery.”

Notably, van Lill highlights a significant increase in funds under management. “The private equity industry had R184.4 billion in funds under management (FUM) at 31 December 2019, up from R171 billion in 2018, representing a compound annual growth rate (CAGR) of 9.2% since 1999 when the survey first began.

“This increase in FUM is a positive indicator for the industry, as it should lead to increased investment into the region,” she explains, adding that despite Southern Africa’s tough economic conditions over the past few years, the industry was still able to raise R21.7 billion in 2019 – an impressive 69.5% more than the R12.8 billion raised in 2018.

“This strong fundraising activity is indicative of the fortitude exhibited by the private equity industry,” van Lill comments, adding that of the funds raised, R7.7 billion (35.3%) stemmed from South African sources, with R3.7bn of total funds earmarked specifically for investment in South Africa.

“The cost of investments in 2019 totalled R25.4 billion – with the top sectors invested in being infrastructure and energy, followed by telecommunications, retail and real estate. Also interesting to note is that – as a proportion of investments made by cost – over 50% of the investments made were to support portfolio companies with expansion and development.”

Highlighting the significant surge in infrastructure investment, from 6.1% in 2018 to 34.7% in 2019, van Lill notes the positive knock-on effects this offers. “Private equity investment in African infrastructure has been an emerging theme over the past decade, with funds from various regions investing actively in infrastructure projects in the energy, transport and ICT sub-categories.

“This can and does serve as a catalyst for development on the continent, in a way that fosters the achievement of targeted and specified developmental goals. Moreover, infrastructure investment opens up new opportunities for add-on or related investments. For example, a toll road project creates the scope for property development, and a host of other down-stream investment activities.”

On the topic of exits, van Lill says that funds returned to investors in 2019 totalled R12 billion, with disposals during the year amounting to R5.3 billion. “In comparison, the annual average funds returned to investors over the last five years (2015-2019) was R14.3 billion, with disposals averaging R8.6 billion over that period.”

Finally, van Lill says the report offers valuable insight into the transformation that has been realised over the past year, not only through investments, but also through the private equity professionals that form part of the industry. “In 2019 we saw an increase in African professionals in the industry, which now account for 43.2% of all professionals (2018: 34.9%).

“Also encouraging is that the vast majority (98%) of fund managers now consider, at a minimum, Environmental, Social, and Governance (ESG) factors when making an investment decision, and 78% of fund managers indicated that their key performance criteria are linked to achieving goals that go beyond financial returns,” says van Lill, who notes that the industry is also having a positive financial impact on portfolio companies. “Findings from the 2020 Survey show total earnings before interest, tax, depreciation and amortisation (EBITDA) for all portfolio companies captured by the survey increased by an average of 21.4% from 31 December 2018 to 31 December 2019.

“Over the same period, the total number of employees for portfolio companies increased by an average of 23.5%, while total revenue of the portfolio companies climbed by an average 27.4%. Similarly, the total capital expenditure of portfolio companies increased by an impressive average of 44.1% from 31 December 2018 to 31 December 2019.

“With many companies around the globe potentially re-evaluating their supply chains in the wake of COVID-19, it is increasingly likely that African economies will look inward to source their needs from a more local footprint. With the need for a more inclusive and sustainable development path, this provides numerous opportunities to making a long-lasting, meaningful impact to millions of people through the investments made by private equity funds, in addition to generating returns,” van Lill concludes.

About SAVCA:

The Southern African Venture Capital and Private Equity Association (SAVCA) is the industry body and public policy advocate for private equity and venture capital in Southern Africa. SAVCA represents about R184 billion in assets under management through 170 members that form part of the private equity and venture capital ecosystem. SAVCA promotes the Southern Africa venture capital and private equity asset classes on a range of matters affecting the industry.

SAVCA also provides relevant and insightful research, offers training on private equity and creates meaningful networking opportunities for industry players.

For more, visit our website: http://www.savca.co.za/

Follow us on Twitter @SAVCAssociation and LinkedIn

The post PRESS RELEASE| PRIVATE EQUITY INDUSTRY WELL POSITIONED TO NAVIGATE COVID-19 CRISIS appeared first on SAVCA.

Despite this distinction, Regulation 28 – the part of the Pension Funds Act that specifies ceilings for exposures to different asset classes – currently places private equity in the same bucket of alternative investments as hedge funds, which is capped at 15% of compliant funds’ assets under management.

Considering that private equity focuses on the real economy and on building successful companies through a combination of capital and strategic know-how, greater awareness is required to enable pension funds to direct capital to private equity and manage their investments appropriately. Private equity offers pension funds attractive returns, the opportunity to diversify their investment exposure and facilitates sustainable and impact investing.

This matter is particularly pertinent now, seeing as measures that enable pension funds to increase their allocation to private equity would be highly supportive in confronting South Africa’s growing unemployment problem; fiscus shortfalls; gross domestic product contraction; the COVID-19 economic crisis and the recovery efforts thereafter; as well as the country’s broader development goals.

The Southern African Venture Capital and Private Equity Industry Association (SAVCA) has prepared a positioning paper, which outlines two proposed amendments to Regulation 28:

1.           Separate hedge funds and private equity into independent asset classes, each with their own caps. This would enable investment decision-makers to model the asset classes independently in their portfolio construction process, so as to properly accommodate the risk/return characteristics of each, thereby evaluating risk-adjusted real returns.

2.           Gradually increase the private equity cap from 10% to 15%. This step can be phased, allowing the industry and investors to scale up capacity in tandem, possibly by one percentage point each year. A gradual approach is also low-risk as unintended consequences can come to light before full implementation.

Increasing the private equity cap would effectively allow a pension fund to take a larger exposure to the entire asset class, enabling a higher degree of diversification. This offers positive public benefits by improving the overall financial security of pension fund savers in the long run.

We believe that a case can easily be made for an even larger increase to the private equity cap, however, we respect that regulators should take a gradual approach to expanding exposure – particularly as pension funds will need to develop the skills to analyse the asset class and the supply side may need to increase capacity.

More details are contained in the positioning paper which can be accessed here.

-ENDS-

About SAVCA:

The Southern African Venture Capital and Private Equity Association (SAVCA) is the industry body and public policy advocate for private equity and venture capital in Southern Africa. SAVCA represents about R171 billion in assets under management through 181 members that form part of the private equity and venture capital ecosystem. SAVCA promotes the Southern Africa venture capital and private equity asset classes on a range of matters affecting the industry.

SAVCA also provides relevant and insightful research, offers training on private equity and creates meaningful networking opportunities for industry players.

For more, visit our website: http://www.savca.co.za/

Follow us on Twitter @SAVCAssociation and LinkedIn

The post PRESS RELEASE: SAVCA CALLS FOR REGULATION 28 AMENDMENTS TO SUPPORT SA’s ECONOMIC RECOVERY appeared first on SAVCA.

April 07 2020: South African businesses are facing the battle of their lives. To ensure as many companies as possible survive the COVID-19 economic crisis, the Southern African Venture Capital and Private Equity Association (SAVCA) has launched a small, medium and micro enterprise (SMME) support platform in collaboration with is membership network, which consist of professionals who manage over R175bn in assets. 

Tanya van Lill, SAVCA CEO, says the platform will provide SMMEs with access to industry professionals for free advice on managing the challenges they face in the wake of COVID-19. “We have called on our members to donate hours from staff who have capacity and specialist skills that companies may need, such as legal, accounting, supply chain and industry specific skills, to name a few.

“SAVCA is proud to report that over 1100 hours have already been pledged to the platform thus far – a number we are certain will continue to rise over the coming days,” says van Lill, who notes that the full list of support on offer is available on SAVCA’s online COVID-19 portal.

“SAVCA will facilitate all requests, matching them with support offered by members. This unique support network will therefore be available to all South African SMMEs – not only SAVCA members’ investee companies – that find themselves in dire need of support as a result of this crisis.”

While ensuring that the industry will do all it can to support companies in need, van Lill acknowledges that this alone will not be enough. “It is going to take urgent, considerable and coordinated support from both the public and private sectors to make it to the other side of this crisis,” she says.

Shelley Lotz, SAVCA’s Head of Regulatory Affairs and project manager for the SMME support initiative, echoes this sentiment, adding that all South Africans have a role to play in supporting the wider economy in whichever way possible during this critical time. “South Africa needs as many businesses as possible to weather the COVID-19 pandemic and to emerge ready to (re)start contributing to the economy as soon as possible.

“Whilst this imperative is important in developed markets, it is even more vital in a country like South Africa where our unemployment rate, even before the pandemic, was one of the highest in the world,” says Lotz.

To utilise the support platform, all SMME’s will be required to provide company details, basic financial information, and employee numbers, as well as upload supporting documentation which could be used for verification purposes during the application process. SAVCA will use the information to:

1. Determine if the criteria have been met i.e. business sustainability prior to COVID-19; and
2. Match the SMME with an appropriate SAVCA member who has volunteered hours.

SAVCA will then fulfil a facilitation and co-ordination role overseeing the system design and implementation, says Lotz. “We’ll also be looking to expand the volunteer programme beyond our membership base in due course, so watch this space.

“In addition to this, SAVCA has initiated a page on its website aimed at providing resources and tools aligned to the effect and impact of Covid-19,” she adds.

“We would like to thank the SAVCA members who have heeded the call to respond to this crisis and assist SMMEs in facing their challenges head on during this difficult time,” says van Lill. “While we know that the road ahead is a long one– now is the time to stand together as a nation,” she concludes.   

For more information on the new SMME support platform, email covid19support@savca.co.za or access the portal via https://covid-19.savca.co.za/

-ENDS-

About SAVCA:

The Southern African Venture Capital and Private Equity Association (SAVCA) is the industry body and public policy advocate for private equity and venture capital in Southern Africa. SAVCA represents about R171 billion in assets under management through 181 members that form part of the private equity and venture capital ecosystem. SAVCA promotes the Southern Africa venture capital and private equity asset classes on a range of matters affecting the industry.

SAVCA also provides relevant and insightful research, offers training on private equity and creates meaningful networking opportunities for industry players.

For more, visit our website: http://www.savca.co.za/

Follow us on Twitter @SAVCAssociation and LinkedIn

The post Private equity and venture capital industry pledges over 1 100 hours to assist SMMEs appeared first on SAVCA.

As an industry that manages R175-billion of investments in private companies, mostly small- and medium-sized businesses, on behalf of pension funds and other investors, the private equity (PE) and venture capital (VC) industry is at the front line in working with companies to confront the challenges presented by the crisis.

It is our responsibility to help these companies confront the current health emergency by expanding capacity in needed supplies and working to ensure public health and safety, and access to required resources. Additionally, supporting employees to protect jobs and manage the impact of the measures to be taken; supporting the economy by protecting supply chains and shifting the strategies of companies to support the public effort; and preparing investee companies for a return to growth and contribution to economic recovery. We are also working to support companies’ balance sheets in order to survive the crisis.

The economy urgently needs policy interventions to enable it to survive the crisis. The South African Venture Capital and Private Equity Industry Association (SAVCA) has prepared the attached paper detailing proposals to consider. These include:

•            For the Unemployment Insurance Fund to be used to help companies retain workers on payroll during the crisis while they cannot work;

•            The Solidarity Fund to be leveraged through a guarantee scheme to enable the lending industry to support individuals and businesses through concessionary loans to bridge the period of the crisis and ensure they return to full production at the end of it; and

•            Business and end consumers, where possible, to keep up purchasing and expenditure to minimise the knock-on effect on the broader ecosystem. Priority should be given to shoring up vulnerable labour and communities as well as suppliers and customers so that we can give effect to a sharper recovery on the other side of the crisis.

We stand ready to work with policy makers, other business groupings, labour and civil society to identify interventions that can best use our scarce resources to defend the economy during this challenging time.

More details are contained in the position paper which can be accessed here: https://savca.co.za/wp-content/uploads/2020/03/SAVCA-Paper-Covid-19-1.pdf

For more details, please contact:

Tanya van Lill

CEO

SAVCA

T: +27 11 268 0041

E: tanya@savca.co.za

W: www.savca.co.za

The post PRESS RELEASE: Policy interventions required to support SA companies in bridging the COVID-19 crisis appeared first on SAVCA.

Our members are urgently engaged with their portfolio companies to support them in facing the challenges presented by the pandemic. This includes both managing market disruption and helping companies rapidly shift strategy to better cater for public needs. However, while the industry has experienced difficult economic cycles, the economic challenges presented by the pandemic are unprecedented. Our members are specialists in helping companies adapt to change and manage challenges. We will bring all the tools in our arsenal to help companies problem solve as active owners of businesses working closely with management teams.

President Cyril Ramaphosa and his ministers have taken decisive leadership in confronting the pandemic, with the support of civil society, business, opposition politicians and others. The SA Venture Capital and Private Equity Industry Association (SAVCA) has produced a paper to contribute to policy thinking, as requested by National Treasury among others.

In it, the industry calls for:

•            UIF to be used to help companies retain workers on payroll during the crisis when they cannot work

•            The Solidarity Fund to be leveraged through a guarantee scheme to enable to lending industry to support individuals and businesses through concessionary loans to bridge the period of the crisis to ensure they return to full production at the end of it

•            Business and end consumers to, where possible, keep up purchasing and expenditure to minimise the knock-on effect on the broader ecosystem. Priority should be given to shoring up vulnerable labour and communities as well as suppliers and customers so that we can give effect to a sharper recovery on the other side of the crisis.

The private equity and venture capital industry is also working hard with investee companies to:

•            Confront the health emergency by expanding capacity in needed supplies and working to ensure public health and safety and access to resources needed during this period

•            Support workers to protect jobs and manage the impact of the measures to be taken

•            Support the economy by protecting supply chains and shifting the strategies of companies to support the public effort.

•            Prepare its investee companies for a return to growth and contribution to economic recovery.

Full details are contained in the attached report.

For more details, please contact:

Tanya van Lill

CEO

SAVCA

T: +27 11 268 0041

E: tanya@savca.co.za

W: www.savca.co.za

The post The SA venture capital and private equity industry responds to the Covid-19 crisis appeared first on SAVCA.

Shelley Lotz (Head of Regulatory Affairs: Southern African Venture Capital and Private Equity Association (SAVCA)) opens the discourse by demystifying the private equity fundamentals as well as offer some insight of the South Africa private equity sector.

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The post The fundamental role of Private Equity | INTO AFRICA May 2019 Edition appeared first on SAVCA.

Last year, South Africa’s unemployment rate hit 27.1% which means there is a lot to gain from the venture capitalist (VC) industry. The venture capitalist industry does not only empower business development but also allows entrepreneurs to enhance their businesses as well as drive jobs creation and employment opportunities.

This opinion made by the CEO of the South African Venture Capital Association (SAVCA), Tanya van Lill, at a case study session in Southern Africa Conference taking place in Stellenbosch.

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The post The Role of Venture Capitalist (VC) in Driving Job Creation in South Africa | TechInAfrica appeared first on SAVCA.

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Southern Africa’s venture capital sector closed off 2024 with R13.35 billion in active investments across 1 325 deals.

For the third consecutive year, ICT-focused start-ups continued to attract the lion’s share of venture capital (VC), accounting for nearly two-thirds of total investment.

This, as data shows Southern Africa’s VC sector closed off 2024 with R13.35 billion in active investments across 1 325 deals, according to the 2025 SAVCA VC Industry Survey.

Conducted by the Southern African Venture Capital and Private Equity Association (SAVCA), in partnership with research firm VS Nova, the annual research initiative shows the ICT sector accounts for 65.9% of deal value, three times more than the next sector.

Within ICT, the top-performing sub-sectors were software (20%), fintech (15.9%) and online markets (7.6%), according to the survey.

Nicola Gubb, interim executive director of SAVCA, comments: “Behind these numbers lies the story of a maturing market, more sophisticated capital deployment, deeper investor networks, and an encouraging shift toward early-growth stage funding, especially Series A, which speaks to a growing confidence in scalable local innovation.”

Regional hubs, particularly the Western Cape and Gauteng, remain vital, with notable growth also coming from beyond SA’s borders, the study reveals.

It further highlights that there are encouraging signals in critical areas such as health tech, which rose to 20% of deal value – its highest share since 2015. This shift was driven by renewed investor interest in life sciences, biotechnology and medical devices.

“The consolidation of capital into ICT and health reflects a maturing, digitally-focused VC ecosystem that is aligned with global investment trends. It also raises important questions about sector diversification, which remains a priority for long-term sustainability.”

Overall, a total of R3.29 billion was deployed to start-ups in 2024, comprising R2.62 billion in equity deals.

In addition, the survey this year reported for the first time on debt made available by VC fund managers, alongside their equity investments. This amounted to R670 million for 2024.

Series A funding climbed to 42.5% of all deals – more than double the proportion recorded in 2023 – indicating a shift toward early-growth capital.

The number of investment rounds also climbed to 222, up 20% from the previous year, into 110 companies.

While the overall equity deal value declined year-on-year, the survey also indicated an increase in deal volume that reflects a broader diversification of funding activity, including more co-investors and growing use of alternative instruments like venture debt.

Commenting on the findings of this year’s survey, Reabetswe Mjekevu, investment principal at SA SME Fund, says the insights are reflective of the current downturn in the exit environment.

“However, the findings also point to a maturing VC landscape that is laying the groundwork for an environment that is ripe for stronger, more sustainable exits in the future, signalling a promising outlook for both investors and founders alike.”

The survey confirmed that exit activity remains a major constraint, with just three exits noted in 2024. Fund managers cited the lack of follow-on capital, limited buyer universe and regulatory hurdles, including exchange controls, as key barriers to exit.

To unlock the next phase of growth, survey respondents identified several strategic priorities, including attracting foreign direct investment, building international networks to help start-ups scale globally, and increasing the supply of quality, fundable deals.

VS Nova founder Stephan Lamprecht states: “South Africa’s VC landscape is showing promising growth, with renewed government involvement − particularly through fund-of-funds initiatives − being closely watched for its potential to transform the asset class and even encourage greater participation from pension funds and insurers.”

“If 2024 has shown us anything, it’s that Southern Africa’s venture capital sector is steadily shifting gears from promise to performance. I remain deeply optimistic about the future we’re building together,” Gubb concludes.

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Southern Africa’s venture capital (VC) sector closed off 2024 with a record R13.35 billion in active investments across 1 325 deals.

Despite global economic uncertainties and constrained exit environments, Southern Africa’s venture capital (VC) sector closed off 2024 with a record R13.35 billion in active investments across 1 325 deals, up 24% year-on-year, according to the 2025 SAVCA VC Survey.

Nicola Gubb, interim executive director of Southern African Venture Capital and Private Equity Association (SAVCA), said the findings reflect an industry that has demonstrated remarkable tenacity and resilience.

“Behind these numbers lies the story of a maturing market, more sophisticated capital deployment, deeper investor networks, and an encouraging shift toward early-growth stage funding, especially Series A, which speaks to a growing confidence in scalable local innovation,” she said.

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Adrian Dommisse, Founding Director of Dommisse Attorneys Inc.

Johannesburg, South Africa, 20 July 2025 – In a landmark move to strengthen South Africa’s venture capital (VC) ecosystem, a new industry-led initiative has been launched to develop a suite of standardised legal documents tailored specifically for the local VC market.

Spearheaded by a coalition of leading VC funds and legal professionals, the initiative aims to create open-source, best-practice legal templates that mirror globally recognised standards, particularly those used in the US, while being firmly grounded in South African legal and regulatory frameworks.

“This initiative is a game-changer for the South African VC industry. It will save time and legal costs, improve transparency for all parties, and ultimately help attract more local and international capital into early-stage businesses,” said Adrian Dommisse, Founding Director of Dommisse Attorneys Inc.

Sign up to one of the working groups.

Purpose-Driven and locally relevant

The initiative is guided by three key objectives:

• To improve efficiency and consistency in venture capital transactions across South Africa;
• To align with international investor expectations through familiar frameworks and terms;
• To build local legal capacity by creating accessible resources and training opportunities for lawyers entering the VC space.

Phase one: Building the Core

The first phase of the project is already underway and will deliver three foundational legal documents:

• Memorandum of Incorporation (MOI)
• Shareholders Agreement (SHA)
• Subscription Agreement

These documents are being adapted from widely used, open-source US templates –primarily the NVCA suite, stripped of jurisdiction-specific language and tailored to South African commercial and legal norms. Importantly, neutrality is a cornerstone of the drafting process, with no single law firm’s style dominating, ensuring broad industry acceptance.

Collaborative legal and investment leadership

Two dedicated working groups, comprising top-tier VC investors and seasoned lawyers, have been formed to steer the process. Their mandate includes:

• mapping international best practices to local frameworks,
• aligning on commercially standard terms, and
• ensuring legal robustness and accessibility in all outputs.

A model Term Sheet will accompany the suite and act as the conceptual “index” for all documents. Working groups will produce and refine each document with a strong emphasis on plain language, usability, and the consolidation of defined terms.

Looking ahead

Once finalised, the legal document suite will be made freely available to the industry –empowering startups, investors, and emerging legal professionals alike. A second phase is already under consideration to expand the library to include additional documents such as intellectual property assignments, director indemnities, and more, based on user feedback and evolving market needs.

This initiative represents a major milestone in South Africa’s journey towards a more scalable, efficient, and globally aligned innovation ecosystem. It promises to lay the legal groundwork for a new generation of high-growth, investable startups.

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The 2025 SAVCA Industry Awards will take place on Friday, 7 November 2025

This year, for the seventh consecutive time, the Southern African Venture Capital and Private Equity Association (SAVCA) will celebrate the transformative power of private capital. The 2025 SAVCA Industry Awards ceremony, set to take place on 07 November, will once again set the benchmark for the best in local entrepreneurship and innovation; boosted by the private capital asset class. SAVCA has now issued the final call for nominations, either from portfolio companies themselves or from their investment partners.

“Each year, we see the bar being raised higher than the year before. Likewise, the calibre of business leaders that we have the honour of celebrating, continues to inspire us as an industry body, as well as the investors who have real skills in recognising growth potential,” says Nicola Gubb, SAVCA’s Interim Executive Director.

Standard award categories (plus a brand new one)

The SAVCA Industry Awards has four categories, the first being for start-ups or companies supported by venture capital. Entrants in this category need to be less than 5 years old and be engaged in early-stage funding efforts (Series A or Series B, excluding seed/pre-seed revenue.

The second category is reserved for small companies with an enterprise value of under R200 million and revenue of under R200 million. Entering companies need to be established with positive operating cash flows.

Companies with an enterprise value and revenue of over R200 million (and under R1.5 billion) are eligible to enter the category for medium companies. Lastly, portfolio companies with an enterprise and revenue of over R1.5 billion can enter the fourth category, set aside for large companies.

This year, for the first time since the inception of the SAVCA Industry Awards, a new ‘GP Award’ category will be introduced. This award will recognise an individual from a fund management firm who has provided exceptional support to a portfolio company. To scoop this prestigious title, the GP professional must have been integral to the success of the transaction and to the subsequent growth of the portfolio company.

Nomination deadline just around the corner

All nominees must be headquartered in Southern Africa and able to show the demonstrated gains that have resulted from partnering with a private equity or venture capital investment firm, which must have exited in the past 18-24 months (leading up to December 2024).

After the nomination deadline (08 August 2025), all nominees will be reviewed. The judging panel – which consists of renowned business leaders and captains of industry – will release a shortlist of finalists for each category. These finalists will then be interviewed and individually assessed by the judges. The winners in each category will be announced at the SAVCA Industry Awards ceremony on 7 November 2025.

A word from the winners

Last year’s winners across all categories were testament to the resilience of local entrepreneurs and their relentless drive to excel – many times, against the odds. In particular, the SME sector, who are the backbone of our economy and drive job creation and innovation was celebrated. In this regard, hearX, who won in the Start-up and Venture Capital Award category, shared their encouragement for more nominations as we approach the upcoming 2025 Industry Awards. As a pioneering health tech company, hearX is committed to making hearing healthcare accessible worldwide. With a global footprint spanning over 190 countries and more than 2.4 million lives impacted, hearX exemplifies the transformative power of early-stage investment and innovation with purpose.

“Winning the SAVCA Startup Award for 2024 was more than a moment of recognition. It acknowledges the journey that hearX has taken from startup to global innovator and highlighted how far we’ve come with the trust and backing of our valued investors, partners, clients, and team. This award reminded us of the daily real-world change we’re creating and serves as inspiration for us to continue pioneering new ways in the hearing tech space.” says Nicole Myburgh, Marketing Lead at hearX Group.

As Vuyo Ntoi, SAVCA Chairperson concludes: “What we’re really looking for in this year’s nominations are portfolio companies who have stood out not only in terms of financial performance, but in how they’ve leveraged private capital to drive innovation, create jobs, expand into new markets, and build resilient, future-ready businesses.

We call on investor and investee companies to submit nominations – your success stories demonstrate the true value of the private equity and venture capital ecosystem in our region.”

Nominations can be made here:

https://research.krutham.com/jfe/form/SV_0xLkrDztxe5uEHc

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By: Southern African Venture Capital and Private Equity Association (SAVCA)

In a tough funding climate, many South African entrepreneurs might be wondering what they can do to make their businesses more appealing to investors. With signs of recovery in the venture capital (VC) and private equity (PE) sectors, there is growing interest in scalable, well-governed SMEs that show potential for high growth. However, competition for funding remains fierce, and founders must be prepared to meet increasingly rigorous investor expectations.

To unpack how entrepreneurs can improve their investment readiness, the Southern African Venture Capital and Private Equity Association (SAVCA) spoke to three members across the PE, VC, and hybrid spectrum: Tomi Amosun, Managing Partner at Summit Africa (PE), Janice Johnston, CEO of Edge Growth Ventures (VC), and Jade Buckton, Senior Associate at 27four Investment Managers (VC). Their insights provide a clear and practical roadmap for founders seeking to secure growth funding in 2025 and beyond.

What are investors looking for?

While investor priorities vary slightly across funding types, the fundamentals remain consistent: strong leadership, sound governance, and scalable models. For PE investors, operational excellence and investor alignment are crucial. “To become investment-ready, SMEs should understand the ‘why‘ behind seeking a private capital partner and be clear on investor fit. Not all investors are the same,” says Amosun. He adds that founders need to understand the implications of different investment instruments, as these dictate everything from return expectations to strategic involvement.

Johnston highlights the importance of scalability in the VC space. “Focus on business models that can grow quickly with limited marginal cost. Tech, platforms, and subscription-based services are naturally scalable,” she says, noting that early traction and clear product-market fit are more compelling than ideas without validation.

From a hybrid perspective, Buckton underscores the need for transparency and team strength. “Investors want to see accurate financials and a capable, committed leadership team. “Ineffective management is a common cause for funding applications to be declined,” she says. This applies to both early-stage startups and more mature SMEs seeking growth capital.

The investment case also improves when businesses show alignment with macroeconomic trends. According to Buckton, sectors such as renewable energy, fintech, and digital infrastructure are particularly attractive to both PE and VC investors, given their scalability and developmental impact. Johnston agrees, adding: “Funds are increasingly looking for innovation that solves real problems, particularly in underserved markets.”

What sends investors running?

Several red flags can derail a promising funding opportunity. For VCs, it often comes down to governance and clarity. “If a startup is not able to clearly demonstrate revenue streams or credible projections, or if it lacks a well-defined exit strategy, that’s a major concern an investor will look out for,” Johnston explains.

From a PE lens, Amosun cautions against operational immaturity, “SMEs often focus heavily on revenue and sales but can forget about internal systems, compliance, and succession planning. That imbalance can be risky when scaling,” he says. He also notes that personal and business finances should be clearly separated to avoid reputational and legal issues.

Buckton points to financial resilience as a key consideration. “Operating with only a couple of months of cash reserves is a red flag. It shows vulnerability to shocks and limited financial resilience,” she says. Overreliance on short-term debt, loss of key customers, or management opacity can also trigger investor concerns. Investors are looking for businesses with the right balance of ambition and operational readiness.

Smart funding, not just any funding

Chasing high valuations without substance can backfire. Buckton shares cautionary tales of startups that collapsed under inflated expectations. “A reasonable valuation gives you room to stumble and recover. Founders who optimise for hype can often end up with cap tables that leave them with little ownership and few options, especially if they raised multiple convertible notes at increasing valuation caps. Think carefully about the compounded dilution upon conversion,” she says.

Amosun notes that transparency and alignment should trump short-term appeal. “Smart investors are not just backing businesses but the people running them. If your story and values don’t resonate with the investor’s mandate, the relationship won’t last,” he says.

What steps can SMEs take to improve investor appeal?

Investors are looking for businesses with traction, transparency, and clear growth plans. Johnston recommends demonstrating product-market fit through real metrics like customer retention, usage, and revenue growth. “Even small wins show you’re solving a real problem,” she says.

Amosun advises strengthening internal systems and governance. “Ensure accurate, timely reporting and focus on optimisation and compliance, not just sales,” he says. He also encourages founders to tell a compelling growth story that aligns with investor timeframes. “A five-to-seven-year plan showing how capital will unlock value is more powerful than abstract ambitions.”

From Buckton’s perspective, being investment-ready also includes knowing your funding options. “Understand the variety of investment tools out there, from equity to blended finance. Choose what fits your business stage and goals,” she says, adding that non-financial support like mentorship and access to networks can be just as critical in early growth stages.

Finally, building relationships matters. All three experts encourage founders to attend industry events, engage with incubators, and use platforms that connect SMEs with capital. According to Johnston, “Founders who make themselves visible and are open to constructive feedback often stand out. Coachability is a signal that you’re resilient and investable.”

A strategic partnership

Meeting a checklist won’t attract private capital. Showing that your business is resilient, scalable, and aligned with investor goals, will. Founders who combine vision with operational excellence will be best placed to access the funding they need to grow. While investor sentiment may fluctuate, the fundamentals of strong business building never go out of style. Focusing on financial discipline, governance, market validation, and relationship building, will help today’s entrepreneurs turn investor interest into long-term partnerships that fuel real, sustainable growth.

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Tshepiso Kobile, SAVCA CEO

We regrettably announce the departure of our Chief Executive Officer, Tshepiso Kobile, who will be pursuing new professional opportunities. The SAVCA Board extends its appreciation to her for her leadership during a pivotal period for the organisation and the broader private capital industry.

Appointed during a time of transition, Tshepiso provided stability and strategic direction as SAVCA reoriented itself for the future. She led the recruitment and onboarding of a new executive team, helping to build internal capacity and position the organisation to serve an increasingly complex and evolving investment environment.

Under her leadership, SAVCA strengthened its voice in regulatory and policy discussions. With her at the helm, we played an active role in shaping elements of the Conduct of Financial Institutions (COFI) Bill and contributed to engagements with the Competition Commission and the Department of Trade, Industry and Competition (DTIC), particularly on public interest considerations in merger transactions. These efforts helped to ensure that private capital is appropriately considered in key policy frameworks.

Tshepiso also represented SAVCA at key international industry body engagements, helping to raise the profile of Southern African private capital on the global stage. During her tenure, SAVCA expanded its advocacy efforts and contributed to discussions on responsible investment, market development, and cross-border capital flows. A strong proponent of industry diversity, she supported initiatives that encouraged the advancement of women in private equity and venture capital and helped position the association as a platform for broader inclusion across the ecosystem.

The growth of SAVCA’s flagship conferences during her time – including the successful relocation of the annual Private Equity Conference to a larger venue to accommodate record attendance – speaks to her meaningful contribution. She has also played a key role in broadening our mandate to more intentionally include all providers of private capital – equity, mezzanine, and debt – ensuring a more inclusive and representative voice for the industry.
We thank her for her contribution to SAVCA’s continued relevance and effectiveness and wish her well as she embarks on the next phase of her career.

The board will soon undertake a process to recruit a permanent CEO. In the interim, to ensure operational continuity and momentum on strategic initiatives, the board has seconded one of its directors, Nicola Gubb, to act as Executive Director in the interim. Nicola is a seasoned executive and director with decades of experience in private equity and broader financial services, including leadership roles at WDB Investment Holdings as Chief Investment Officer, and earlier positions at Vunani Capital, RMB Fund Managers and HSBC. She will support SAVCA’s senior managers in maintaining the Association’s day-to-day operations and driving its key programmes until a permanent CEO is appointed.

For further enquiries, please contact: info@savca.co.za

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• Scalar International is one of only five fund managers chosen out of 66 as part of the 2024 cohort of the International Climate Finance Accelerator, a programme powered by Accelerating Impact.
• The Africa Decarbonisation Fund I, managed by Scalar and Mergence Investment Managers in partnership, will invest in energy-efficient / decarbonisation projects in the private commercial and industrial (C&I) sector within SADC, with a focus on women- and youth-led SMEs.
• The target is to reduce 1 GT of carbon emissions by 2030; achieve energy efficiency in 30,000 buildings by crowding in investment of at least $100 million; and create 15,000 full-time jobs.

Hubert Gutsa, CEO, Scalar

Cape Town, South Africa:- Scalar International, a black-owned international venture capital and private equity firm, has been selected by Luxembourg’s International Climate Finance Accelerator (www.icfa.lu/) to form part of its 2024 cohort. The ICFA aims to accelerate emerging fund managers to advance sustainability-based finance solutions for carbon reduction, mobilising international institutional capital to build a stronger and more integrated climate finance system. Out of an initial expression of interest by 66 firms, 48 were selected for consideration with a final five selected. Scalar has partnered with Mergence Investment Managers to launch a fund-in-concept, called the Africa Decarbonisation Fund I.

Mergence is a leading black-owned institutional fund manager with a strong impact investing track record in SADC. The fund  has a target size of $100-150 million and is also one of only 10 so-called “Article 9” funds worldwide, launched recently by the EU’s Sustainable Finance Disclosure Regulation (SFDR) to facilitate attraction of Limited Partners to private equity funds.

Via the fund, the Scalar and Mergence impact partnership will invest in energy-efficient / decarbonisation projects in the private commercial and industrial (C&I) sector by supporting the emergence of first-tier, indigenous, women- and youth-led companies that are developing new technologies in clean energy solutions and digital infrastructure. At least 25% of the fund’s investment will be into underserved communities.

The fund’s first stage of investments aims to target C&I decarbonisation and energy efficiency in Southern Africa. The pipeline of projects is primarily in the data centre and manufacturing sectors, which have seen a 40% decrease in grid energy reliability due to their reliance on the regional energy pool. Most SADC member states consume their energy from the Southern African Power Pool, which is primarily 40% hydro energy and 50% coal-powered energy.

The fund is at advanced negotiations with European Development Finance Institutions in support of the EU-Africa Global Gateway Investment Package. The fund seeks to work with local pension funds in support of South Africa’s national determination contributions, together forming a Global Just Transition Partnership using the Scalar platform.

Some target investment areas include:

• On-site power generation
• Critical infrastructure utilities
• Smart grid technology
• Manufacturing energy efficiency
• Digital infrastructure energy
• Industrial energy storage, EV, battery storage
• Enterprise on-site electric vehicle infrastructure
• Commercial energy efficiency (equipment retrofit)
• Blockchain/AI infrastructure that supports digital transformation
• Aggregated virtual solar power purchase agreements (PPAs)

Investments will also be guided by four of the United Nations Sustainable Development Goals (SDGs) – 7 (affordable and clean energy); 8 (decent work and economic growth); 10 (reduced inequalities); and 13 (climate change).

Investee businesses will be put through their own incubator and accelerator programme by the Scalar-Mergence fund, providing training and technical as well as financial assistance. The fund’s targets include working together with all communities to reduce 1 GT of carbon emissions by 2030 (equivalent to 100,000 MW of energy); achieving energy efficiency in 30,000 buildings by crowding in investment of $100 – $150 million; and job creation of 15,000 full-time positions.

Commenting on the market opportunity, Hubert Gutsa, Managing Director of Scalar International, says: “Africa holds 60% of the best solar resources globally, yet has only 1% of installed solar photovoltaic capacity. Furthermore, women make up 48% of the global workforce yet account for less than 20% of labour in the renewable energy sector.

According to the International Energy Agency, 43% of the African continent’s population lack access to electricity. Many African governments are struggling with power infrastructure, with South Africa’s power utility being no exception.

Massive investment is required, and we are delighted, in our partnership with Mergence, to have been accepted into the ICFA’s current cohort, whose platform will help us as General Partner to network, fundraise, and attract Limited Partners. We believe we can make a real difference – by 2030, the electricity demand in Africa’s C&I sector is expected to grow by more than 270% compared to current levels”, said Mr Gutsa.

Semoli Mokhanoi, Chief Commercial Officer at Mergence Investment Managers, says: “We make a powerful partnership with Scalar. The teams have more than five years of collaboration and 20 years of experience in advising, modelling and structuring infrastructure transactions. At Mergence we have deep experience in private markets investing in challenging geographies, including in renewable energy, water, housing, transport, digital connectivity, property and health.

Transformation has a dual meaning in the context of our investments: transforming the ownership patterns of the clean energy and digital technology sectors in tandem with transforming the nature and extent of infrastructure access for inclusive economic growth and development,” said Mr Mokhanoi.

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During a thought-provoking panel discussion at the recent Southern African Venture Capital and Private Equity Association (SAVCA) Private Equity (PE) Conference, industry experts explored the current state of infrastructure in South Africa. The panel, moderated by Lungile Mashele, Sector Specialist in Energy and Infrastructure at the Public Investment Corporation (PIC), discussed issues ranging from demand and supply imbalances, funding gaps and project challenges, to suitable funding models and collaboration structures for public and private sector investors.

Challenges facing project development

There are several challenges that South Africa faces from an infrastructure development and investment perspective, notes Mameetse Masemola, Acting Head and Deputy Director-General of Infrastructure Investment Planning and Oversight at Infrastructure South Africa (ISA). “Key to this is the lack of focus and allocation of resources towards project preparation and planning, which results in an inadequate investment-grade infrastructure project pipeline.”

ISA plays a crucial role in assisting project owners – ranging from state-owned enterprises to water and energy authorities – with preparation and deal packaging to make projects viable for investment. “For National Treasury to consider these projects, baseline information needs to be in place, and we work closely with sponsors to ensure that happens,” Masemola added.

Budget constraints are another major challenge that Masemola raises. “While the ministry allocates capital over a three-year cycle, we have a R1.6 trillion infrastructure investment gap – this is the gap between the current project pipeline and the funding available.”

Innovative financing models for infrastructure

Blended finance has emerged as a critical tool in making “un-bankable” projects more attractive to investors. Refilwe Mokanse, an Infrastructure Finance Specialist at Infrastructure Finance, highlighted that their organisation currently has 26 blended finance projects in different stages of development. “Some are in advanced stages, going through due diligence, while for others, we are still engaging with the market to gauge interest,” Mokanse said. “Our mandate is to identify projects that are initially un-bankable, assess their feasibility, and structure them in a way that reduces risk and attracts financing.”

Expanding on the blended finance approach, Mokanse explained, “A blended finance model includes various sources of funding, such as grant funding from the government and viability capital from the Infrastructure Fund, which can take the form of a grant, a concessionary loan, equity or debt, depending on what is required to de-risk a particular project.

“The aim is to create an environment where the private sector can step in with the relevant funding. This could take the form of commercial finance, development finance institution (DFI) funding, multilateral development finance, and ideally, increased engagement with institutional investors to secure their participation in these projects,” he added.

To this point, public-private partnerships (PPPs) were identified as a critical mechanism for infrastructure investment, “PPPs create a strong opportunity for asset managers to provide funding either through the project SPVs or companies responding to the bids,” Mokanse noted. “We look at successful global models and assess their applicability to the South African market.”

In the energy sector, decentralisation has been a growing trend in recent years. From an investor’s perspective, Mosa Molebatsi, Senior Investment Associate at Mergence Investment Managers, explained that there are two buckets of projects in this regard. “On one end, larger off-takers like a mining company or manufacturing plant are looking to set up decentralised energy solutions to meet their energy demands off-grid. On the other hand, for the smaller portfolio players, we typically invest in aggregators that are driving projects in the sub-1MW space.” The latter model works as there is competition from international developers. The 3rd model, which is within the Residential space, has been lagging as the risk – return dynamics here are quite different.

Water infrastructure: A critical risk to business continuity

While energy has been a primary focus for South Africa, panellists stressed that water infrastructure is an equally pressing concern. “For the longest time, we’ve seen significant attention given to electricity, but water has often been neglected, especially at a corporate and industrial level,” said Mike Smith, Principal at The Water Fund. “This needs to change at a government, municipal and corporate level, because water is the single biggest risk to business continuity in South Africa. Without water, industry simply stops.”

The biggest funding gap, according to Smith, exists at the Critical National Infrastructure (CNI) level. “The CNI projects in the water space are extremely complex. Consequently, the transaction and due diligence costs that are required for those projects are difficult and expensive. This is compounded by the fact that at a CNI level, the projects are relatively small – often less than R100-million. We believe that project finance is the best approach here as it puts the vested interests and risks in the right hands – those of water service providers.”

Collaboration is key

Despite their varying viewpoints, panellists were all in agreement that greater collaboration between the public and private sectors is crucial for scaling up infrastructure investment. “We need to ensure projects get the buy-in they need from both sides to be bankable,” Masemola concluded.

The post Scaling up private sector-driven funding models for large infrastructure appeared first on SAVCA.

South Africa, 28 January 2025: Sanlam Investments is proud to sponsor Africa’s Green Economy Summit (AGES) 2025, scheduled to take place from 19-21 February 2025 at the Century City Conference Centre in Cape Town. AGES is a premier event designed to connect global capital with transformative green economy businesses and projects across Africa, ranging from entrepreneurial start-ups to large-scale national infrastructure initiatives.

Carl Roothman, CEO of Sanlam Investments, comments, “The theme of AGES 2025, Building a Climate Resilient Africa: Catalysing Investment and Innovation in the Green and Blue Economies, aligns perfectly with our sustainability north star.” “AGES presents a unique opportunity for global investors to engage with economically attractive high-impact African initiatives, unlocking new pathways for sustainable growth. Last year, investments were committed towards over 30 green projects valued at more than US$1.4 billion. This is why AGES is a vital platform for aligning capital with Africa’s green and blue economy goals. In 2025, we need a unified focus on investing in solutions that address Africa’s most urgent challenges, such as clean energy, resilient infrastructure and climate change, while offering investors the prospects of compelling investment outcomes.”

Leadership and Expertise at AGES 2025

AGES 2025 will bring together leading voices in sustainability and finance, including:

• Abel Sakhau, Chief Sustainability Officer, Sanlam Group, South Africa
• Andrew Johnstone, Chief Executive Officer, Climate Fund Managers, the Netherlands
• Ibrahim Shelleng, Senior Advisor to the President on Climate Finance, Nigeria
• Harsen Nyambe, Director of Sustainable Environment and Blue Economy, African Union, Ethiopia
• James Mnyupe, Presidential Economic Advisor and Hydrogen Commissioner, Government of The Republic of Namibia
• Seewraj Nundlall, Director, Economic Development Board, Mauritius
• Geordin Hill-Lewis, Mayor, City of Cape Town, South Africa
• Shameela Soobramoney, CEO, National Business Initiative (NBI)

These experts will provide invaluable insights and practical guidance to help shape Africa’s green economy and accelerate its transition to a climate-resilient future.

Exploring green hydrogen and carbon market opportunities

The global push for decarbonisation has made green hydrogen a cornerstone of sustainable energy. Africa, with its abundant renewable resources, is well-positioned to lead in this field. AGES 2025 will explore how investments and partnerships can unlock the potential of green hydrogen for both local and global impact.

Additionally, a pre-conference masterclass on navigating carbon market opportunities will provide participants with the tools to optimise carbon revenues and drive impactful climate action.
2025: Focused on impact
The World Meteorological Organisation (WMO) officially named 2024 the warmest year on record. Given the pace of climate change and its continent-wide impact, Roothman hopes 2025 will bring renewed focus on these topics, many of which will be cornerstones of conversation at AGES:

• Renewable energy expansion: A significant increase in solar, wind and hydro projects. Sanlam Investments is supporting this through its own balance sheet as well as through funds such as the Sustainable Infrastructure Fund, funding commercial, industrial and utility scale projects, and the Resilient Investment Fund, backing SMEs like Energy Partners to scale clean energy solutions.
• Green hydrogen leadership: Southern Africa becoming a global leader in green hydrogen, unlocking both export and local energy opportunities, driven in Namibia and South Africa by Sanlam Investments’ pioneering partner Climate Fund Managers.
• Capital harvest: Establishing agricultural cultivations from the ground up to help generate jobs and support more households.
• Inclusive climate finance: Empowering SMEs and underrepresented groups to access and leverage climate-focused investments, enabling all African communities to benefit from green growth.
• Sustainable investment: More investments in projects and businesses that balance growth with environmental responsibility, demonstrated through initiatives like the Sanlam Living Planet Fund, in partnership with WWF.

Blue economy initiatives: Harnessing Africa’s oceans and water resources for sustainable economic growth, with Climate Fund Managers supporting Oceans Finance Company (OFC) to close the world’s largest debt-for-nature swap which will help protect the Galapagos Islands, one of the planet’s most vital ecosystems.

Join AGES 2025

The summit offers a unique platform to connect, collaborate and accelerate the green economy across Africa. By bringing together global capital, cutting-edge solutions, and visionary leadership AGES 2025 will play a key role in advancing Africa’s green transition.

Roothman concludes, “Africa stands at the threshold of a transformative era. Sustainable investing is evolving, and there is a growing need for investors to move beyond traditional ESG considerations to focus on scalable and impactful investments. It’s time to stop talking and thinking about policy and regulation alone – it is time for action.

“From AGES, I want to see commitment to new, green opportunities for our country and the continent. In South Africa, particularly, our country is prime for green investments – for one, economically and secondly, we have the optimal climate, open landscapes, the sea, wind and sun. Currently, asset allocation towards these investments is insufficient. AGES offers a platform for meaningful dialogue and actionable commitments to create lasting impact.”

Disclaimer: Sanlam Investments consists of authorised financial services providers in terms of FAIS and disclaimers can be viewed on our website.

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Elodie Delagneau, Investment Lead at Vuka Group, emphasised the group’s success in linking ambitious entrepreneurs with international financiers, highlighting the 2024 edition which brought a pipeline of $1.2 billion by 32 projects as proof of Africa’s potential and global interest in transformative initiatives.

This year’s Africa’s Green Economy Summit (AGES) will feature 60 diverse projects from over 180 submissions across vital sectors, including water and waste management, the blue economy, agriculture, transport logistics, green building, and renewable energy. These projects, spread across 12 African countries, including South Africa, Rwanda, Botswana, and Nigeria, aim to revolutionise the green economy landscape.

“Our focus this year is sharp, with currently 37 robust SMMES, startups and infrastructure projects confirmed, aimed at national and regional development,” Delagneau stated. The palpable excitement among project leaders and investors underscores Vuka’s commitment to implementing projects with tangible outcomes.

Sectoral Focus on Sustainable Innovation

Vuka Group’s innovative project portfolio addresses key infrastructure and environmental challenges. This year’s focus includes revamping waste management, transport, agriculture, and urban development using cutting-edge practices and technologies.

• Revolutionising Waste Management: Advanced technologies and AI are employed to transform waste into resources, promoting a circular economy. Sectors like mining, energy, and transport benefit from greener practices to boost both economic and environmental outcomes.
• Transforming Transportation Systems: Transportation, crucial for trade and connectivity, is also a primary focus. AGES will highlight initiatives to enhance logistical flows and reduce environmental impacts, including fuel-efficient systems and pollution-monitoring technologies.
• Advancing Regenerative Agriculture: Recognising Africa’s agricultural potential, Vuka promotes regenerative practices to enhance yields while preserving the environment, balancing ecological benefits and commercial interests across land and ocean resources.
• Enhancing Urban Development and Carbon Capture: Vuka prioritises sustainable urban development, focusing on efficient and environmentally responsible urban planning and infrastructure. AGES will explore the role of carbon credits in climate change mitigation during a dedicated pre-conference day.

Platform for Actionable Decision-Making

Delagneau emphasised the critical significance of these projects, setting a new benchmark for sustainable development in Africa. Through innovation and collaboration, Vuka addresses today’s challenges while shaping the future.

AGES is not merely a showcase; it’s a forum for policy dialogue and actionable decision-making. Vuka Group aims to transform AGES into a hub where innovation and opportunity converge, propelling Africa’s development forward.

A crucial component of this success is collaboration with partners like AP3 Advisory, The Lab, Savant, Holocene, and Circular Energy. These partnerships drive the sourcing of projects and identification of bankable opportunities across the industry and continent, working together to reshape Africa’s economic landscape with innovative solutions and strategic investments.

A Holistic Approach to the Green Economy

Beyond the AGES pitch experience, Vuka recently launched the Green Economy Hub, a comprehensive online resource offering information on ongoing initiatives, active investors, and sustainability projects. This year-round platform promotes continuous engagement, allowing projects to connect with investors even if they haven’t had the chance to pitch at AGES.

Delagneau concluded, “The Green Economy Hub enhances the ecosystem for green investments in Africa, ensuring meaningful connections foster growth and innovation.” This approach underscores Vuka’s belief in showcasing bankable projects to inspire global investment shifts towards Africa.

For more information on these pioneering projects and to secure a place at AGES, interested parties can contact Vuka Group or visit the Green Economy Hub online.

Contact Information:
Vuka Group: Elodie Delagneau
Email: elodie.delagneau@wearevuka.com 
Green Economy Hub: https://wearevuka.com/green-economy

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