South African Venture Capital and Private Equity Association

Feb 03, 2014
Could you briefly introduce SAVCA? The South African
Venture Capital & Private Equity Association (SAVCA)
is a
non-profit organisation founded in 1998 to promote the venture capital and private equity asset class in South Africa. Our mission is to support the development of a vibrant industry through:
  • The promotion of the interests of the industry;
  • The promotion of highest ethical and professional standards within the private equity and venture capital industry;
  • The dissemination of information and research relating to private equity; and
  • Presenting a single industry voice to regulators and legislators.
SAVCA is involved in a number of activities including industry research and surveys, networking and events for industry players, developing industry standards and guidelines, as well as training and education. Many of these activities, including research, are available to the general public, while our members benefit from preferential rates. For example, our annual conference, Private Equity in Southern Africa is the region's flagship annual private equity event, which we co-host with the Financial Times Group and the Emerging Markets Private Equity Association. This year's conference will be held in Cape Town from 10th February - 11th, and MFW4A is a sponsor of the Private Equity Masterclass for Pension Funds that is a part of that. What are some of your major achievements and lessons learnt? SAVCA has a history of producing market research and information. Since 2001, we have produced an Annual Survey of the South African private equity industry, in collaboration with the accounting and advisory firm KPMG. The survey provides an overview of our industry - covering key themes such as fundraising activity, sources of funding, returns performances, deal flow and exits. The RisCura-SAVCA Quarterly Performance survey offers a perspective on performance trends in the South African private equity market. This year we will be publishing the SAVCA-DBSA Economic Impact Study, which presents the results of a survey of private equity portfolio companies, aimed at determining the economic and financial impact that this form of capital has on businesses. Our research plays a critical role in raising awareness of private equity in the region and of the crucial role that it plays in the economy - and in institutional portfolios. On this note, institutional investors are paying attention to the role that private equity plays in boosting the returns of a diversified portfolio. Recent developments, including the landmark announcement by the Government Employee Pension Fund (GEPF) that it will be allocating 5% of its portfolio to unlisted assets, which includes private equity, is an endorsement of this view. Moreover, SAVCA was instrumental in advocating for and contributing to the new pension regulations in 2011; amendments to the regulations increased the allowable allocation by pension funds to private equity from 2.5% of assets under management, to 10%. Importantly, the new regulation is partly responsible for the recent drive by South African pension funds to invest more in the rest of Africa. In addition to research and advocacy work, SAVCA has developed training programmes in areas for industry professionals, including an annual Foundation Programme in Private Equity, and sessions on specialist topics ranging from new regulatory developments in the industry to the role of Environmental, Social and Governance (ESG) Issues in the private equity investment process. Could you describe some key challenges SAVCA is facing? The issue of increasing local capital invested in private equity in South Africa is a primary goal for SAVCA - and applies across the African region. Education about the asset class and its potential for contributing to economic growth, and highlighting the role of patient private equity capital in driving business efficiency and profitability, are essential for achieving this goal. Spreading the message to institutional investors, regulators, policymakers and other stakeholders will take time - and requires committed partnerships. In what ways can the Partnership for Making Finance Work for Africa (MFW4A) support SAVCA's work? SAVCA already has a good relationship with MFW4A - we both share the ultimate goal of supporting financial sector development in Africa. MFW4A, through its website and networks, allows us to reach stakeholders (investors, policy makers, regulators, government officials) who may not necessarily be aware of SAVCA. Beyond that, we have a common interest in developing long-term finance in Africa. I mentioned earlier that MFW4A is sponsoring our Private Equity Masterclass next week; we hope that this is the first of many opportunities for collaboration. We also look forward to engaging with MFW4A as it develops its work programme with pension funds, who are potential investors for our members. On our side, we bring MFW4A an extensive network of experienced fund managers and investors, familiar with the key issues and priorities for the development of private equity in Africa.