The Southern African Venture Capital and Private Equity Association (SAVCA) recently hosted its first in-person private equity (PE) conference since before the pandemic hit our shores in early 2020. Over 400 local and international delegates attended the two-day event which took place at the beautiful Ashanti Estate in Paarl, Western Cape.

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.”