Next year marks the 20th anniversary of the Broad-Based Black Economic Empowerment Act 53 of 2003. The financial sector has made extensive advancements in achieving parity across multiple segments, but control and ownership remains largely uninterrupted. A report published by the FSCA in 2022 states that the South African financial sector is “concentrated and interconnected with the largest banks, insurers and fund managers controlling the majority of assets”. It is against this backdrop that the sector can expect a flurry of interventions designed to accelerate the adoption of B-BBEE and promote competition - some of which are explained below.
HAVAÍC’s Rob Heath takes the long view to unpack the perceived downturn in African Venture Capital (VC) funding. Here’s what the data really means and what the future holds for this burgeoning alternative asset class in Africa.
The financial ecosystem in Africa is reaching an exciting new phase of development, especially in terms of the provision of financial services for the underbanked and unbanked. Inclusive financial institutions (IFIs) focusing on this segment of the market, and rather than traditional banks, continue to be at the vanguard of financial inclusion. For the IFI sector to continue expand, it must attract additional capital, which in turn requires commercial success.
Access to capital is probably the most significant factor in the success of growth-stage businesses. While investment funding is well within reach in many European countries (especially Scandinavian countries, and in Germany, Switzerland, Luxembourg and the UK), lack of access to finance hamstrings businesses in Africa in terms of their ability to expand.
Albert Alsina, CEO and Group Managing Partner, Mediterrania Capital Partners: In order to prepare for a successful exit, we always begin to discuss the exit before the investment is executed to ensure there is full alignment of interest with the company shareholders early on and avoid future surprises. At that time, the PE firm should always provide the partner company with a comprehensive analysis including advantages and disadvantages of potential exit routes such as an IPO, Secondary Sale, Trade Sale, MBO with financing, etc. During these initial discussions, the PE firm and the company shareholders should choose one or two options to focus on and begin to consider the most appropriate timing and process.
South African private equity (PE) and venture capital (VC) activity is improving after Covid-induced uncertainty, with industry players reporting an increase in transactions. Some notable trends have emerged and are expected to accelerate into the remainder of 2022, writes Tanya van Lill, CEO of the South African Venture Capital Association (SAVCA).
Despite the ongoing health and economic impact of Covid-19 worldwide, PwC’s annual Africa Capital Markets Watch report shows that African markets have continued with a modest recovery through 2021, reflected in higher values of non-local corporate, sovereign and supranational debt raised during the year. Average issuances were larger than the prior year, with 94 issuances valued at $47.5bn (2020: 81 issuances worth $28.5bn).
Africa Finance Corporation and Allianz Global Investors have deployed a loan structure that is drawing institutional investors to fund critical infrastructure in Africa, write Wola Asase, Head of Syndications and Mostafa Abdel Motaal, Associate Vice President in the Syndications team at Africa Finance Corporation.
Once the COVID-19 pandemic is under control, the resumption of economic activity in Africa could result in a compelling story for investors. According to the IMF, GDP growth in both West Africa and East Africa will start outstripping growth in developed countries from next year, and from 2023 the continent overtake developed countries.
Rob Bergman explores the opportunities Series B and C funding on the continent. Rob is a Corporate Finance Principal at investment banking firm Bravura, which has won the Best Independent Advisory Firm AGF award for the third consecutive year (one overall and two for South Africa.)
The financial technology (fintech) ecosystem in Africa is entering into a new, exciting and challenging phase with more capital, more competition from incumbents from different quarters and more consolidation (M&A). As key segments grow, the rewards and risks grow for challengers and incumbents.