Welcome to Investing for Growth
How do private equity and venture capital investors affect South Africa? How do they fit into professional investor portfolios? You have landed on the page to answer those and any other questions you have about the asset class.
Check out Ask & Engage for answers. We have also commissioned independent research setting out the impact of the asset class on South Africa's public policy priorities, as well as the investment case for private equity and venture capital. You can find those and much more in our Knowledge Hub.
We're glad to have you on board one of the most exciting parts of the South African investment industry where we are #InvestingForGrowth.
Private equity and venture capital play an important role in our economy, by helping companies to grow, and in turn, create jobs. Beyond supporting businesses with growth capital, private equity firms actively help companies develop good governance, innovate and access new markets. According to a study commissioned by SAVCA, companies that receive private equity or venture capital investment are likely to see enhanced BEE performance, improvements in the speed and success of new innovations, with 87% of firms reporting that the investment allowed their businesses to grow faster.
As previously stated, private equity is an important job creator. In 2021, private equity investee companies grew employment by 4.2% while the wider South African economy grew it by 2%. Prior to this, when the pressures from Covid-19 lockdowns took a toll on the economy, companies owned by private equity funds were able to receive assistance with liquidity and restructuring related issues, while investee companies were able to grow employment by 4.4%, even though the wider economy experienced a 4.2% drop in employment.
Private equity companies do not maintain the status quo when managing the companies they invest in. Instead, they are active participants in strategy development and other important decision-making through their role on the board which allows them to add value and drive growth which lead to job creation.
Privately held companies often find it difficult to access capital needed to expand and are therefore unable to take advantage of growth opportunities. This is where private equity plays a vital role, putting money at risk to support the development of companies.
In South Africa, private equity also makes a major contribution towards solving challenges such as load shedding. In 2022, 16% of private equity investments by value were in energy and related sectors, with 12 new projects backed. Infrastructure generally was the largest category of new private equity investments, with one in every five made in infrastructure.
The South African private equity and venture capital industry manages over R206-billion in funds, largely on behalf of institutional investors such as pension funds and insurance companies, as well as international investors. SAVCA’s members, which number around 150, manage most of these funds. There are many South African success stories of companies that have benefitted from private equity, like MetroFibre and Nando's. Our venture capital industry has also backed companies that have been able to go global like Fundamo (sold to Visa in 2011) and FlightScope, which is now the global leader in tracking and analysing sports performance data.
The purpose of this website is to provide detailed insight into the role that private equity and venture capital play within the South African economy. It provides answers to common questions, as well as shares independent research on the sector.
