From The Editor's Desk

by Marylou Greig

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Given the challenging macro backdrop and negative sentiment, it’s unsurprising that equity returns have been elusive for some time. Coupled with a narrowing selection of South African listed equities, investors have been on the hunt for returns in alternative asset classes, which has propelled the rise in private equity (PE). Globally, the year 2024 was a significant one for PE, marked by major legal and regulatory developments that have reshaped the global landscape. These changes reflect its growth as an asset class and the institutionalisation of the sector, driven by increasing scrutiny, investor protection imperatives, and the need for greater transparency.

 

In South Africa, PE firms – which previously struggled with exits – found improved market conditions to sell mature assets or merge portfolio companies. DealMakers recorded 52 PE transactions in the listed space in 2024, up from 45 in 2023. In the unlisted space, PE activity was down, with 54 transactions recorded against 79 in theprevious year. Venture capital investments have experienced a tempered pace compared with previous years, as investors prioritise due diligence and risk mitigation amid tightening global capital flows.

Investments during 2024 were concentrated in several key sectors, reflecting both global trends and domestic priorities. Four sectors stood out as preferred areas for investment: technology and financial services, infrastructure and energy, healthcare, and manufacturing and green energy.
 

The financial technology sector saw significant activity, demonstrated by Brazilian fintech giant Nubank's US$150m investment in Tyme Group, elevating Tyme to a valuation of $1,5bn and granting it unicorn status. And in a bid to modernise South Africa’s logistical
infrastructure and transition from coal-based power generation to cleaner energy sources, the Public Investment Corporation partnered with Abu Dhabi-based International Resources Holding to invest in rail infrastructure and green energy projects.

Another infrastructure transaction – PAIDF’s exit of assets to Harith InfraCo – was awarded the Catalyst Private Equity Deal of the Year (pg 1). Other shortlisted nominees were Actis’ acquisition from Telkom of Swiftnet, its telecom tower portfolio; the exit by Old
Mutual Private Equity of its investment in Chill Beverages; and Actis’ exit of Octotel and RSAWeb to AIIM and consortium partners.
So what can we expect for the PE industry in 2025? An article on page 6 highlights the trends expected this year. And while PE
investments are known for their significant potential for returns, navigating the path to a successful exit can sometimes be challenging – the Bowmans team explores navigating PE exits via continuation funds (pg 8).

The government's evolving stance on privatisation and private sector involvement, especially in areas like energy and infrastructure, could create new investment opportunities in 2025, signalling a potential shift in policy that may favour PE investments.

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