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Private Equity Review 2022

South Africa’s private equity market is growing as the country recovers from the pandemic, with the most invested sectors being infrastructure, real estate sector and energy. This growth is despite the recession currently looming. Cape Town, recently crowned as the ‘Silicon valley of South Africa’, houses many of the target companies that attract the attention of venture capital and private equity funds, with many choosing to set up their main base of operations in Cape Town (historically Johannesburg).

Current market

Though 2020 was naturally a difficult year, the private equity market still raised R11.1bn of which R8.9bn came from local pension and endowment funds. This is the largest value of funds raised from South African sources in the last 5 years. The energy sector and the real estate sector received a majority of the value of the funds in 2020, however, in terms of the number of investments rather than value, manufacturing received the most.

2021 saw significant investment in South Africa as it recovered from the pandemic and stabilised in the eyes of the international community. Start-ups within South Africa received more than $800 million in 2021 and this is expected to grow in 2022. In 2021, the real estate sector received 18.9% of the funds while the infrastructure received 22% of the funds. The reason for infrastructure receiving the most funds is the lack of new governmental initiatives, requiring these companies to seek external investment. Though not reflected in the statistics, the food and agriculture sector had large deals such as Sanlam Private Equity acquiring a majority of Cavalier, which operates a red meat supply chain, and EXEO Capital investing in Maia Group’s Agri-Vie Fund II which focuses on the healthy foods market.

Future market

Through 2022, the market remained positive despite a looming recession and economic instability. This instability affected asset growth in traditional sectors, and holders of large assets sought alpha in alternative asset classes, of which private equity is the largest. South African prospects look positive as we recover from the effects of the pandemic, political and civil unrest, as well as recent infrastructural devastation.

Going forward a large number of private equity firms in South Africa, approximately 41%, are prioritising managing risk in portfolio companies, and many have expressed that their strategy remains largely unchanged. Furthermore, 14% of private equity firms in SA are intending to focus on bolt-on and tuck-in acquisitions to augment their portfolio companies. This means that it is likely that private equity funds are to be directed toward earlier-stage companies, through the balance sheets of their portfolio companies. Of the total value invested by private equity firms into companies in 2021, 12.4% was invested directly into start-up and early-stage companies, and the bulk of the investments (45.5%) were apportioned to buyout and replacements capital for expanding companies (in which case, these companies used the funds to purchase smaller companies).

Although the above sectors have received a high number or value of funds, fintech portfolio companies have begun making a presence due to South Africa’s highly tech-literate population which is also underserved in terms of financial products and services, such as the series B funding round of Ozow, which attracted a $48 million investment.

Notable trends across South Africa’s private equity market include firstly the buying and subsequent delisting of companies from the Johannesburg Stock Exchange, as well as the expansion of South African start-ups into other territories both in and out of the continent. Both of these trends are expected to continue beyond 2022.

Secondly, a prominent trend within the infrastructure sector is the disposal of existing assets, which accounts for the majority of deal flow in the infrastructure sector due to relatively few new government-initiated projects.

Thirdly, there has been a great increase in the consideration of ESG goals in the investment decisions of private equity firms, with 96% of PE firms considering ESG factors when making an investment decision. Investors across the globe, as well as within South Africa, are increasingly recognising the importance of environmental, social and governance (ESG) in their investments. Furthermore, the ESG risks and opportunities are considered very seriously within South Africa, as the local market has been incorporating these ESG factors for many years.

Fourthly, ongoing environmental challenges in the country have led to numerous issues, such as load shedding and flooding, and so the growing importance of sustainability gives rise to opportunities for investments by private equity firms. South Africa has abundant sunlight and there is hope that there will be government investment, alongside private investment, into renewable sources of energy in the future to aid our power generation challenges.


Despite the challenges posed by COVID-19 and civil unrest on the South African private equity market, it has seen significant growth and recovery. This indicates that the private equity market continues to remain agile and is a viable vehicle to invest in the economy. The market can also expect to see a rise in funds invested in the fintech sector as the adoption of digital technologies and e-commerce increases.



  • Lungile Sibanyoni, Consultant: Strategy and Business Design
  • Benji Dorfan, Analyst: Strategy and Business Design