Private equity firms’ investments are powering up energy opportunities in southern Africa

Southern African infrastructure and energy were key investment areas for private equity (PE) firms over the past year, with a 21% increase in PE fundraising in the region.

Chief executive of the Southern African Venture Capital and Private Equity Association (Savca), Tshepiso Kobile, says PE firms have not only achieved decent exits (which grew in value and number) but also helped their investee companies to navigate the volatile environment.

“We are encouraged by the positive sentiment in the market, with a sizable number of Savca members expressing optimism that the remainder of 2023 will see a healthy amount of deal flow. 

“Interestingly, our findings were that while large funds (with funds under management of more than R5-billion) contributed the most to the increase in investment projects, PE firms with less than R500-million funds under management were also active,” she says.

According to a Savca industry survey, this year marks the return of investment into the sector to pre-pandemic levels, with 34.7% of investment having gone into infrastructure in 2019.

Typically, secular sectors such as infrastructure have proven robust and can preserve value, despite fluctuations in the broader economic landscape.

Executive director and fund principal of Mahlako Financial Services, Mitesh Pema, says the sector has and continues to present a huge opportunity for investors due to the significant gaps that exist in the region. 

“Energy, logistics, transport and telecommunications, in particular, are key infrastructure areas where capital allocation can and is making a significant difference on the ground. Investors need to be mindful that patient capital is key when it comes to infrastructure, as it does not convert as timeously as other investments. 

“However, the positive impact they will and can have on the broader economy and society is well worth the wait,” he says.

Energy supply crisis