Private Equity - South Africa | Statista Market Forecast

The deal value in the Private Equity market is projected to reach US$58.33m in 2024.
It is expected to show an annual growth rate (CAGR 2024-2025) of 6.51% resulting in a projected total amount of US$62.12m by 2025.
The average size per deal in the Private Equity market amounts to US$9.72m in 2024.
From a global comparison perspective it is shown that the highest deal value is reached United States (US$594.00bn in 2024).
In the Private Equity market, the number of deals is expected to amount to 5.46 by 2025.

Definition:

Private equity involves partnerships that buy, manage, and eventually sell companies. These firms manage funds for institutional and accredited investors, who commit significant capital for extended periods. Private equity funds can acquire entire private or public companies or participate in buyouts with other investors, but they typically avoid holding stakes in publicly traded companies. The Private Equity market encompasses a broad range of deal types that involve acquiring equity ownership in private companies. This market typically includes leveraged buyouts (LBOs), growth capital, Carve-outs, and other forms of equity investments that target mature businesses with the potential for operational improvements and value creation. The market presented here does not include Venture Capital investments. While both Private Equity and Venture Capital involve equity stakes in companies, Venture Capital specifically focuses on high-growth potential startups, while private equity firms invest in established companies with the aim of increasing the value of these companies before selling their investment after several years.

Additional information:

The market contains the following KPIs: the deal value, the number of deals, the average deal size as well as the assets under management (AUM). Key players in this market are companies such as Blackstone, The Carlyle Group, KKR, Goldman Sachs, General Atlantic, and Warburg Pincus.

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Leveraged Buyouts (LBOs)
Growth Capital
Carve-Outs
Distressed Buyouts
Secondary Buyouts

Venture Capital
Venture Debt
Traditional bank loans
Digital capital raising

The Private Equity Market in South Africa is undergoing minimal decline, influenced by factors like economic uncertainty, fluctuations in commodity prices, and a cautious investment climate that impacts overall growth and confidence in the sector.

Customer preferences: In South Africa, there is a growing interest in sustainable and socially responsible investment opportunities within the Private Equity Market. Investors are increasingly prioritizing funds that align with environmental, social, and governance (ESG) criteria, reflecting a cultural shift towards ethical consumption. Additionally, younger demographics are driving demand for innovative startups focused on technology and social impact, prompting private equity firms to adapt their strategies to attract this conscientious investor base. This trend is reshaping the competitive landscape and influencing capital allocation decisions.

Trends in the market: In South Africa, the Private Equity Market is experiencing a shift towards sustainable investing, driven by heightened awareness of environmental, social, and governance (ESG) factors among investors. This trend is characterized by a growing preference for funds that prioritize social impact alongside financial returns. Additionally, the rise of technology-focused startups is capturing the interest of younger investors who seek innovative solutions to societal challenges. As a result, private equity firms are increasingly integrating ESG criteria into their investment strategies, reshaping market dynamics and influencing capital allocation decisions across various sectors.

Local special circumstances: In South Africa, the Private Equity Market is uniquely influenced by its socio-economic landscape, marked by significant inequality and a strong push for inclusive growth. The country's historical context emphasizes the need for investment that addresses social disparities, prompting private equity firms to focus on businesses that create jobs and empower marginalized communities. Additionally, regulatory frameworks like the Broad-Based Black Economic Empowerment (B-BBEE) policies encourage firms to align their investments with national development goals, further shaping investment strategies toward sustainable and impactful ventures.

Underlying macroeconomic factors: The Private Equity Market in South Africa is significantly shaped by macroeconomic factors such as central bank policies, particularly interest rates. Low interest rates can enhance investment activity by lowering the cost of borrowing, making it easier for private equity firms to finance acquisitions and expand their portfolios. Conversely, rising interest rates could constrain capital availability, slowing down investment growth. Additionally, external economic conditions, like global market fluctuations and commodity price changes, impact investor sentiment and confidence, which, in turn, influences deal flow and the overall performance of private equity investments in the country.

Data coverage:

The figures are based on deal value, number of deals, the average size of each deal, and assets under management within the Private Equity market.

Modeling approach / Market size:

Market sizes are determined through a combined top-down and bottom-up approach, building on a specific rationale for each market segment. As a basis for evaluating markets, we use annual financial reports of key players, industry reports, third-party reports, and publicly available databases. In addition, we use relevant key market indicators and data from country-specific associations, such as: GDP, total investment (% of GDP), household wealth (per Adult), high income (% of population), and number of high-net-worth individuals (HNWI). This data helps us estimate the market size for each country individually.

Forecasts:

In our forecasts, we apply diverse forecasting techniques. The selection of forecasting techniques is based on the behavior of the particular market. In this market, we use the HOLT-damped Trend method to forecast future development. The main drivers are total investment (% of GDP), household wealth (per Adult), number of high-income persons, and number of high-net-worth individuals (HNWI).

Additional notes:

The market is updated twice a year in case market dynamics change.

This report presents a comprehensive analysis and additional information on the Financial market, in a PDF format.

In the last decades, private equity has emerged as a dominant force in global finance, reshaping industries and driving economic growth worldwide. After the peak experienced in 2021, however, private equity activity slowed down in 2022 and 2023, due to multiple factors such as inflationary headwinds, rising interest rates, geopolitical unrest and general uncertainty. With an estimated value of nearly four trillion dollars, private equity dry capital - a term commonly used in the private equity world to refer to committed, but unallocated capital - reached unprecedented heights in 2023. A high level of this capital means that private equity firms have unspent cash reserves. Among the most influential private equity firms worldwide, the Blackstone Group is the largest in terms of funds raised.