Unlocking the potential of the “Africa Rising” narrative through private equity

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Unlocking the potential of the “Africa Rising” narrative through private equity

Executive Summary

The “why” for private equity and Africa

Private equity as an asset class has, for a number of years, been widely viewed as preferred over traditional asset classes. The removal of a large degree of the market risk and volatility created by market perception and macro-economic factors from private equity investments, and even sensationalism through the media, is likely to be behind this investor preference.

Returns in the private equity industry support this preference. In the March 2018 edition of the RisCura-SAVCA South African Private Equity Performance Report (which tracks the performance of a representative basket of South African private equity funds with the aim of establishing and maintaining an authoritative benchmark for the measurement of private equity performance in the South African market), one of the most notable statistics reported was that, in the most recently measured period, the 5 and 10-year IRR returns were 13.6 percent and 12.9 percent respectively, outperforming listed metrics over a 3-year period, and earning positive direct alpha (i.e., active return on investment). This was despite the political uncertainty and corruption scandals that have unsettled the South African market over the past couple of years.

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Performance magazine issue 26, May 2018

Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients.

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