Survey shows improved Southern African private equity performance

7th September 2023

By: Cameron Mackay

Creamer Media Senior Online Writer


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Management consulting company EY Africa private capital leader and partner Graham Stokoe on September 7 discussed key findings of the Southern African Venture Capital and Private Equity Association’s yearly Private Equity (PE) Industry Survey, and emphasised the improved performance of Southern African PE firms in 2022, when compared with global trends.

“We had 49 PE firms participate in this survey. EY has been doing the survey for the past three years, and it’s pleasing that the number of participants has increased from 40 last year. This is a great representation of the industry and what’s happening. This has contributed to great data for us, and it has grown the credibility of the results,” he stated at the 2023 PE Equity Survey launch, held in Johannesburg.

Information in the survey covers events up to December 31 last year. The survey covers analysis of the industry’s strategic priorities. This includes environmental, social and governance (ESG) and impact investing, talent, broad-based black economic empowerment, fundraising, investment and divestment activity, value creation and funds under management.

The survey includes comparisons to global PE trends and the level of detail that respondents have provided varies across topics and questions in the survey.

“It’s the first time in our three years of doing the survey that we got industry participants to share enough information on their portfolio companies. This includes information on revenues, employees and earnings before interest, taxes, depreciation and amortisation information. This helps to see if this industry is driving value creation and therefore economic growth.”

While a global recession and geopolitical concerns are seen as the biggest industry concerns by both Southern African and global PE firms, Stokoe pointed out that the timing of the survey could have a slight impact on the findings.

The views of PE firms in Southern Africa were gathered in March and April 2022 and those of global PE firms in November and December 2022.

“Some of those macroeconomic shifts on interest rates and inflation have only come out in the last few months, not when the survey was done in March and April last year.

“In some of the broader areas like cybersecurity and other global concerns such as geopolitics, one has to keep in mind that with the global survey, global PE firms are much larger than the average Southern African PE firm size. This will lead to some differences in the findings.”


In addition to geopolitical concerns, the survey found that 57% of PE firms have specific impact investing mandates, an increase from 45% in 2021.

Of the respondents whose funds do not have impact investing mandates, 79% are likely to consider such mandates within the next five years, a decrease from 86% in 2021.

The study also indicates that strategic priorities for Southern African PE firms, aside from asset growth, are ESG initiatives and talent management.

“This is a theme that has grown massively global. It’s been a theme in a number of Southern African PEs for many years, but the importance of this theme is growing globally, to attract capital and you know, showing meaningful impact. Investors want financial returns, but also want the fuller impact of their investments as well,” Stokoe said.

He also pointed out that survey results indicate that the PE sector is making positive shifts in terms of transformation.

Fifty-nine per cent of PE firms have over 50% black ownership without applying modified flow through.

Further, 28% of PE firms have over 30% black female leadership and 60% of PE firms have over 50% black management.

Stokoe also noted that Southern African PE firms have continued to focus on hiring more people with racially and ethnically diverse backgrounds in both the front and back offices.

He added that, in terms of PE firms with over 30% representation of under-represented people with racially and ethnically diverse backgrounds, Southern African firms with over 30% representation increased from about 60% to 70% in 2021 to 80% last year.

Global firms with over 30% representation, however, grew from about 10% to 20%.

“We’re far more diverse in Southern Africa compared to global PE firms. It’s a trend that’s added a lot of momentum to the growth of transformation, as Southern Africa has also improved in this metric. Black management meanwhile has decreased slightly, so there’s more transformation in terms of ownership, but there are ups and downs in various areas.”

He also pointed out that survey results indicated that the number of firms with over 30% women participation on boards has increased from 28% in 2021 to 42% last year. This follows a decrease from 2020 to 2021.

Survey results also indicated that PE fundraising in Southern Africa witnessed an increase of 21% in 2022, compared with 2021.

This took fundraising activities to closer to pre-pandemic levels in 2019, which was contrary to global PE fundraising trends, which decreased by 13%.

“In rands and dollar terms, it doesn’t look as good, but Southern Africa is dominated by smaller PE firms so this plays a role”.

He also pointed out that 51% of funds raised were from investors outside of Southern Africa, with European and UK investors making up 77% of investments from outside Southern Africa.

“For the first time, last year we had more capital coming in from non-Southern African investors than from Southern African investors. Despite all of Southern Africa’s challenges, investors from outside of the region are putting their money into Southern African PE firms.”

Study results also showed that contrary to global trends – where PE exits were muted in 2022 – Southern African PE firms witnessed a strong increase in both the value of exit proceeds (breaching the R20-billion level for the first time since 2011), and the number of exits (highest in the last four years).

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online




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