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    KPMG andSAVCA

    Venture Capital and Private Equity Industry

    Perormance Survey o South Arica

    covering the 2012 calendar year

    June 2013

    kpmg.co.za

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    KPMG and SAVCA Private Equity Survey 1

    Foreword 2

    Highlights 4

    Sources of information 8

    Introduction to private equity 10

    Black Economic Empowerment 14

    Funds under management 16

    Fund raising activity 27

    Investment activity 32

    Analysis of BEE investments 40

    Exits 42

    Performance 48

    Private equity investment professionals 50

    Participants 54

    Glossary 58

    Contents

    The inormation contained herein is o a general nature and is not intended to address the circumstances o any particular individualor entity. Although we endeavour to provide accurate and timely inormation, there can be no guarantee that such inormationis accurate as o the date it is received or that it will continue to be accurate in the uture. No one should act on such inormationwithout appropriate proessional advice ater a thorough examination o the particular situation. The KPMG name, logo and cuttingthrough complexity are registered trademarks or trademarks o KPMG International.

    2013 KPMG Services Proprietary Limited, a South Arican company and a member rm o the KPMG network o independentmember rms aliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed inSouth Arica. MC10034

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    2 Foreword

    KPMG and SAVCA are proud to have collaborated or the thirteenth year in producing

    the 2012 KPMG and SAVCA Venture Capital and Private Equity Industry Perormance

    Survey. The survey is widely recognised as one o the most detailed o its type globally

    and has given participants and other stakeholders greater understanding o the industry

    and its trends.

    Questionnaires were emailed to 126 potential survey participants; 95 participantsrepresenting 102 unds responded. Alternative sources were used to obtain inormation

    on a urther 15 private equity rms representing 15 unds. Although these did not

    provide us with as much detail as our questionnaire, we believe the inormation is

    complete and understated i anything. From both KPMG and SAVCAs understanding

    o the industry, we believe that the survey represents in excess o 90% o the South

    Arican Private Equity industry by unds under management.

    This years survey refects an industry on the move, driven by revitalised global investor

    appetite and beckoning opportunity in the Arican and South Arican market. The lit in

    unds under management in the South Arican market refects both the sturdy growth

    in portolio values and the outcome o successul undraising programmes during the

    course o 2012. Over three, ve and ten years, the returns rom private equity continue

    to outshine those rom listed equity and is one reason why local and oshore investors

    are paying attention and committing capital to the asset class. The undraising drive has

    accelerated into 2013 and already includes some headline-grabbing und closes; next

    years survey thereore is likely to show an even more sizeable rise in commitments.

    Supported by und managers growing access to unds, and rom a post-crisis inclination

    towards ollow-on investments in existing portolio companies, there now is a

    discernible shit back in avour o making investments into new assets. Although deals

    are being signed across industries, a ocus on inrastructure is evolving and shows an

    appreciation o the tremendous growth and developmental opportunity in the energy,

    transport, telecommunications and social inrastructure sectors. A related trend is the

    expanding geographic reach north o the South Arican border, as pan-Arican mandates

    become more popular and und managers expand their networks.

    Many South Arican private equity houses are sitting on mature portolios and are

    readying or exits. The deal fow trend is likely to gather pace during the course o 2013

    and will be a blend o sales to trade buyers, to other private equity rms and possibly

    through listings on the stock exchange.

    Regulation remains a predominant theme in South Arican private equity and is one o

    the highlights o the past ve years or so. Now, with ar greater clarity on the regulation

    and legislation that govern the industry, und managers and investors are able to

    navigate the asset class with a degree o condence that didnt exist a ew years ago.

    Foreword

    2013 KPMG Services Proprietary Limited, a South Arican company and a member rm o the KPMG network o independent member rms aliated with KPMG International Cooperative(KPMG International), a Swiss entity. All rights reserved. Printed in South Arica. MC10034

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    KPMG and SAVCA Private Equity Survey 3

    Changes to pension und regulation that gives trustees scope to allocate up to

    one-tenth o their portolios to private equity, and thereore to improve portolio

    diversication, are heartening. So too is the commitment made by the Government

    Employee Pension Fund, the largest pension und in Arica, to allocate up to 5% o

    its R1.2 trillion portolio to private equity.

    For pension unds, development nance institutions and other institutional investors,private equity, through its relationship-driven investment approach, its accountability to

    investors and its medium to long-term horizon, is a powerul tool or the implementation

    o sustainable-investment mandates. The asset class thereore has an increasingly

    important unction in the development o the Arican region, in a way that satises

    investors need or returns. The South Arican private equity industry has a notable role

    to play in this. This survey enables all interested parties a greater understanding o the

    industry and its trends.

    KPMG and SAVCA would like to extend their thanks to all the participants in the survey.

    We are also grateul to the survey committee and to KPMGs Private Equity Clients and

    Sectors team or all their eorts in producing this survey.

    Warren Watkins

    Director KPMG Services (Pty) Ltd

    Head o Private Equity Markets

    Arica Region

    Erika van der Merwe

    CEO: South Arican Venture

    Capital and Private Equity

    Association

    2013 KPMG Services Proprietary Limited, a South Arican company and a member rm o the KPMG network o independent member rms aliated with KPMG International Cooperative(KPMG International), a Swiss entity. All rights reserved. Printed in South Arica. MC10034

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    4 Highlights

    South Aricas private equity industry has R126.4 billion in unds under management

    at 31 December 2012, an increase o 10.4% rom R114.5 billion at 31 December

    2011. This represents a compound annual growth rate o 11.6% (excluding undrawn

    commitments) since 1999 when the survey rst began

    R35.3 billion o the unds under management are in undrawn commitments at the

    end o 2012. R19.9 billion is exclusively available or uture investments in South

    Arica and R15.4 billion or Pan Arica (Arica including South Arica). This represents

    an impressive increase o 15.5% rom the R30.6 billion o the total undrawn

    commitments at the end o 2011

    O the R35.3 billion in undrawn commitments, 87.9% is with Independents (R25.8

    billion) and 15.0% Captives-Financial Services (R5.3 billion)

    Captives-Government and und managers that are themselves black-owned,

    empowered or infuenced (that is, have at least 5.0% black ownership) had R94.6

    billion o unds under management at 31 December 2012, an increase o 4.4% (2011:

    R90.6 billion). O the total unds under management, 74.8% are thus at least black-

    infuenced or classied as Captives-Government (2011: 79.1%)

    R14.4 billion was raised in 2012 which is an increase rom the R10.7 bi llion raised

    during 2011

    56.2% o all unds raised during 2012 were rom South Arican sources (2011:

    62.0%). South Arica has been the largest source o 46.0% o cumulative unds raised

    to date and not yet returned to investors (2011:45.4%)

    Investment activity or independents only, as a % o GDP, was 0.10% (2011: 0.14%).

    This compares with the UK o 1.05% and the US o 0.86%. Israel remains the

    highest percentage at 1.81%

    Investment activity is at R10.6 billion during 2012 where it was at R16.5 billion in

    2011. O the R10.6 billion invested, R5 bil lion was or ollow-on investments,

    and R5.6 billion was or new investments

    In 2012, R7 billion o unds were returned to investors (2011: R25.7 billion).

    Highlights

    2013 KPMG Services Proprietary Limited, a South Arican company and a member rm o theKPMG network o independent member rms aliated with KPMG International Cooperative(KPMG International), a Swiss entity. All rights reserved. Printed in South Arica. MC10034

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    KPMG and SAVCA Private Equity Survey 5

    201220112010200920082007200620052004200320022001

    13.3

    5.2

    7.1

    10.3

    35.9

    8.3

    6.2

    10.5

    37.0

    10.2

    5.2

    8.7

    39.3

    11.9

    5.8

    7.8

    39.7

    13.9

    7.0

    7.7

    42.5

    18.4

    10.1

    6.2

    59.

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