The Private Equity Review - ENS

Chapter 17South AfricaMohamed Sajid Darsot and Tanya Lok 1IOVERVIEWThe recent global financial crisis and forecasts of a protracted financial winter settingin over the globe’s traditional economic superpowers has refocused attention on theemerging markets and the opportunities for growth that they present, in contrast withtheir more developed counterparts. Africa appears to have withstood the global financialcrisis and has emerged, in many respects, stronger than before. As the opportunitiesfor real growth become fewer and further between in many of the so-called developedeconomies, private equity funds have increasingly turned to Africa in their ongoing questto seek out the most attractive opportunities for sustainable investment returns.South Africa has long been the leading economic power in Africa. Largely due toits strong entrepreneurial culture, developed infrastructure, and sophisticated regulatoryand legal framework, it has seen its private equity industry demonstrate significantgrowth and resilience over the past few years. A major driver for this growth has been theincrease in investors’ appetite for exposure to positive, absolute returns and significantportfolio diversification benefits that investments in private equity funds in South Africaoffer. 2South Africa is also widely regarded as the ‘gateway’ or ‘springboard’ into theAfrican continent by firms who aspire to expand their reach and pursuit of new investmentopportunities in some of the world’s fastest-growing – and relatively untapped – emergingeconomies, those of sub-Saharan Africa. Both the World Bank and the International1 Mohamed Sajid Darsot is a director and Tanya Lok is an associate at ENS (Edward NathanSonnenbergs Inc.).2 KPMG and the South African Venture Capital and Private Equity Association (‘SAVCA’),‘Venture Capital and Private Equity Industry Performance Survey of South Africa covering the2008 calendar year’, May 2009.306