Unquote" South Africa conference finds SA private equity has backing of regulators

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"Private equity and especially venture capital should be underpinning the investment drive into South Africa," according to the director general of South Africa's National Treasury, Lesetja Kganyago, speaking at the unquote" South Africa Private Equity Congress on 7 February in Cape Town. The Government has a target investment-to-GDP ratio of 25%; it has grown from 15% four years ago to 22% today.

Despite the problems facing all markets during this part of the cycle, South African private equity is set to carry on growing since indigenous players built their track records during very challenging times, according to John Gnodde at Brait Capital, one of South Africa's largest buyout groups. They are therefore well placed to overcome difficulty.

South Africa is less affected by the credit crunch than the US and Europe. The challenges it potentially faces from political turbulence are also not considered severe. "In Africa, money flows to resources instead of where stable regimes are," according to Oliver Scholz of Control Risks, who added that resource-rich South Africa and Nigeria were favourites on his clients' Africa lists. He pointed out that interestingly, this was the opposite situation to the transition seen in Central and Eastern Europe, where political stability was seen as the driving force for investment, meaning the former CIS countries, rich in oil, did not see vast capital inflows compared with their Westerly, more politically-advanced neighbours such as Poland.