Key Takeaways
- • Private equity funds under management in Southern Africa grew to R171.8bn (US$13.2bn) in 2016, up 8.2% from R158.8bn (US$12.1bn) in 2015, according to the SAVCA 2017 Private Equity Industry Survey covering the 2016 calendar year.
- • Capital returned to investors surged 123.2% year-over-year to R18.3bn (US$1.4bn) in 2016, signaling robust exit activity despite challenging fundraising conditions.
- • Fundraising declined sharply by 63% to R10.2bn (US$0.8bn) in 2016 from R27.5bn (US$2.1bn) in 2015, reflecting a more selective investment environment following record 2015 activity.
- • Old Mutual Alternative Investments (OMAI) maintains a positive long-term outlook on South African private equity, emphasizing the sector's role in economic growth and its ability to navigate multi-year investment cycles and economic downturns.
- • OMAI's investment teams identified compelling opportunities in 2016 despite market headwinds, positioning the firm to capitalize on the sector's structural importance to infrastructure development, job creation, and economic development.
Summary
The Southern African Venture Capital and Private Equity Association (SAVCA) released its 2017 Private Equity Industry Survey on June 29, 2017, providing comprehensive analysis of the region's private equity market during the 2016 calendar year. The report reveals a market in transition, with managed assets expanding despite challenging fundraising conditions and a pullback from the record activity of 2015.
Private equity funds under management in Southern Africa expanded to R171.8bn (US$13.2bn) as of end-2016, representing 8.2% growth from the prior year's R158.8bn (US$12.1bn). This steady expansion in the asset base reflects the long-term nature of private equity commitments and the sustained value creation occurring across existing portfolios. More notably, capital returned to investors—a key metric of exit activity and investor realization—surged dramatically by 123.2% to R18.3bn (US$1.4bn), demonstrating that portfolio companies matured and were successfully monetized despite tighter deal flow conditions.
However, fundraising activity contracted sharply in 2016, with only R10.2bn (US$0.8bn) raised compared to R27.5bn (US$2.1bn) in 2015, a decline of nearly 63%. This pullback followed a record fundraising year and reflects the more selective environment investors faced when identifying high-return opportunities in a challenging macroeconomic context.
Paul Boynton, Chief Executive Officer of Old Mutual Alternative Investments (OMAI), emphasized that while 2016 presented obstacles in sourcing attractive investment opportunities, the private equity industry remains essential to South Africa's long-term economic trajectory. OMAI's experienced investment teams identified compelling opportunities despite the difficult environment, positioning the firm to benefit from the sector's structural role in financing infrastructure, creating employment, and supporting business growth. Boynton noted that private equity's typical five-to-seven-year or longer investment horizons enable managers to weather economic cycles and industry downturns—a critical advantage in navigating volatile markets.
Private equity funds under management in Southern Africa expanded to R171.8bn (US$13.2bn) as of end-2016, representing 8.2% growth from the prior year's R158.8bn (US$12.1bn). This steady expansion in the asset base reflects the long-term nature of private equity commitments and the sustained value creation occurring across existing portfolios. More notably, capital returned to investors—a key metric of exit activity and investor realization—surged dramatically by 123.2% to R18.3bn (US$1.4bn), demonstrating that portfolio companies matured and were successfully monetized despite tighter deal flow conditions.
However, fundraising activity contracted sharply in 2016, with only R10.2bn (US$0.8bn) raised compared to R27.5bn (US$2.1bn) in 2015, a decline of nearly 63%. This pullback followed a record fundraising year and reflects the more selective environment investors faced when identifying high-return opportunities in a challenging macroeconomic context.
Paul Boynton, Chief Executive Officer of Old Mutual Alternative Investments (OMAI), emphasized that while 2016 presented obstacles in sourcing attractive investment opportunities, the private equity industry remains essential to South Africa's long-term economic trajectory. OMAI's experienced investment teams identified compelling opportunities despite the difficult environment, positioning the firm to benefit from the sector's structural role in financing infrastructure, creating employment, and supporting business growth. Boynton noted that private equity's typical five-to-seven-year or longer investment horizons enable managers to weather economic cycles and industry downturns—a critical advantage in navigating volatile markets.
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