In times of turmoil, private equity pushes ahead in South Africa

It adds up.
It adds up.
Image: Reuters/Rogan Ward
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Sputtering economic growth, a weak currency, and political strife are just a few of the things threatening South Africa’s economy. Despite the turmoil, investors still see private equity in South Africa, and Africa in general, as a good bet.

Private equity in South Africa has outperformed listed stocks over a three-, five-, and 10-year period, according to a new report from the Southern African Venture Capital and Private Equity Association (SAVCA) and investment advisory firm RisCura.

“Beyond these numbers—and equally important—is the strong influence that the industry has in ensuring positive, measurable and lasting impact in the portfolio businesses in which it is active,” said Erika van der Merwe, CEO of  SAVCA. Indeed, South Africa’s startup scene has long been a bright spot in otherwise gloomy times.

South Africa’s private equity gains are in line with the rest of the continent. A report by Bloomberg showed that the prices private equity firms pay for stakes in African companies are at their highest in six years. Private equity fundraising in Africa rreached $4.3 billion in 2015, according to another report by RisCura.

“We also think that perceived risk on the continent may have declined, as investors become more comfortable with the environment,” said Rory Ord, an executive at RisCura.

Africa as a whole saw 823 private equity deals between 2010 and 2015, worth a total of $21.6 billion, according to the African Private Equity and Venture Capital Association (pdf).