Londiwe Buthelezi
Private equity fund Capitalworks has raised more than R2.7 billion under its second fund in a rapid time of six months, predominantly from international investors.
Capitalworks is looking to invest these funds in sectors such as health care, education, financial services and fast-moving consumer goods.
The firm, which now has third-party assets under management of more than R5bn, said more than two-thirds of the funds raised came from international investors, including global institutional investors, high-net-worth family funds and large charities.
Its Private Equity Fund 2 was over-subscribed, which the company said demonstrated strong international appetite for South African investment opportunities.
Capitalworks’s Private Equity Fund 1 raised R1.5bn and has investments in Pronto Building Materials and a number of companies in the mining value chain. It is also invested in QCIL, a Ugandan company that produces antiretroviral drugs under licence from Cipla.
According to Chad Smart, the co-founder and chairman of Capitalworks, it normally took two to three years for private equity managers of its size to raise this amount of capital.
Smart said the main investment focus in Private Equity Fund 2 was opportunities within South Africa.
He said Capitalworks helped the companies it invested in by providing financial assistance and drawing up and executing acquisition and roll-out strategies, among other things.
Smart said investors believed that, in the medium to long term, South Africa still provided growth opportunities even though the short-term outlook was gloomy.
Erika van der Merwe, the chief executive of the South African Venture Capital and Private Equity Association (Savca), said there was a huge appetite globally for exposure to Africa. Institutional investors such as pension funds were looking for private equity managers to invest in the opportunities offered by the continent.
Van der Merwe said the increasing appetite for private equity investing had also been supported by the need for portfolio managers to diversify their investments.
“The performance of private equity in the three-, five- and 10-year horizon has outperformed listed equity. So it is an attractive option for portfolio managers like institutional investors who are looking for long-term investments,” Van der Merwe said.
According to the KPMG-Savca 2013 private equity survey, South Africa’s private equity industry had R126.4bn in funds under management at the end of December last year. It said 56.2 percent of funds raised last year were from South African sources.