Following the recent appointment of SAVCA directors, the SAVCA board has an almost 40% female representation. We speak to the two new female directors, Cathy Goddard (CG), Chief Investment Officer at Vuwa, and Yvonne Maitin (YM), Partner at Bopa Moruo, about SAVCA’s role in Southern African private equity.

How do you see the role of SAVCA within the private equity industry?
 

CG: SAVCA plays a great role in the SA private equity market in bringing together many players to drive key common interest issues such as sector research and returns, taxation, regulatory, and other governance issues. Regulation keeps on rolling out and getting more detailed and costly; the sharing of resources and knowledge, through SAVCA, to ease the pain of compliance, is key to any industry player.

More recently SAVCA has broadened its role and the value-add to its membership base with events and sessions aimed at knowledge sharing, networking, talent recruitment and benchmarks, etc. My personal favourite has been the Women in Private Equity series of events which SAVCA has run. I look forward to the next few years of further growth in value-add by this critical industry body; including the organisation’s drive to stimulate further interest in private equity as an asset class and to provide assistance to attract capital to the Southern African region, for the benefit of all of SAVCA’s members. Road-shows aren’t easy and a little help to open doors goes a long way!
 

YM: The role of SAVCA in the private equity industry is a crucial one in terms of the development and promotion of the industry. The role is dynamic as it needs to address the pertinent issues across all industry stakeholders. In order for the industry to grow there needs to be a continuous dialogue and flow of information across fund managers, investors, professional service providers and the regulatory bodies.

The private equity industry is at times criticised for being opaque through its nature of guarding privately held information resulting in a lack of transparency, understanding, and appreciation by those outside the industry. SAVCA therefore has a valuable role to play in bridging the knowledge gap, lobbying for conducive practices and acting as the first port of call for any information seekers. The realm of transformation in the industry across various elements is also an area which needs great attention from SAVCA in terms of building an environment that is more inclusive, accommodative and diverse.     
 
What is the impact of private equity within the African economy?
 
CG: Of course private equity provides critical access to finance which is life-blood of developing economies. But something of keen interest to me is governance – a less directly measurable impact of private equity participation in the investee companies. Good governance is critical to long-term sustainability and in, hindsight, bad governance, in some shape or form, is always the cause of business failure. 
 
Private equity capital requires good governance in its investee companies to protect its investment but the effects are felt in a wider sphere. A reduction in business failure helps to ultimately reduce the cost of finance. Better reporting encourages capital inflows. Certainly, the impact is greater than we know. Private Equity capital has impacted the economies in which it operates, and can continue to show benefits for many years to come.
 
YM: The outlook for growth across African economies varies based on the diverse cultural, economic and political circumstances of each country. That said, there is a common requirement of continued investment in various sectors including infrastructure, agriculture, consumer products, telecommunications and financial services alongside other informal, entrepreneurial sectors. Although private equity is commonly known for maximising investor returns, it also has an important role in economic development.

As a provider of long-term capital, the industry contributes to economic growth in various ways including providing growth capital to growing sustainable businesses within their own countries and across borders. Private equity also has a prominent role in the adoption of world-class levels of corporate governance, broader ESG practices, and institutionalising corporate structures, thereby facilitating an environment conducive to attracting much-needed foreign capital into the African continent.
 
What is your outlook for the private equity industry within Southern Africa?
 
CG: It’s my view that Southern Africa will continue to attract capital which is drawn in by yields, but that in a world of continually increasing regulation, we may find that funding will be harder to attract, as the global growth rate ticks up again and other interesting regions present juicy options. SAVCA plays a key role in assistance, education, training, lobbying and marketing for all stakeholders in the Southern Africa region to keep the investors comfortable,and the investees ahead of the pack.
 
YM: Growth prospects have weakened throughout the world economy, the impact of which is likely to be felt by all industry players. That said, private equity as an alternative asset class has increasingly gained more attention from traditional investors. Part of the attractiveness lies in the diversification that the asset class brings in the strategic asset allocation of model portfolios given its low correlation to listed equity markets.

Moreover, rising pension assets under management and regulatory changes that are supportive of allocations to the asset class are key underlying drivers to the growth of the private equity industry. The industry should continue to grow and attract new sources of capital with the caveat of liquidity concerns and mandate suitability of non-traditional investors. On the investment management side, deal flow opportunities are still available and attractive, although the matching of seller and buyer expectations in a relatively low-growth environment still remains a challenge.