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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.
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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
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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
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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
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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
59.2
24.7
12.3
6.4
86.3
31.2
14.0
10.5
109.4
39.7
12.1
5.3
105.4
21.1
Captives Other
Captives Government
Captives Financial Services
Independents
12.3
2.0
114.2
12.0 15.2 14.3 13.9
24.5
53.7 48.354.8
24.0
24.0
10.3
0.9
114.5
57.5
21.7
42.9
Investment Holding Company0.0 0.00.0 0.0
0.0
0.0
0.0
0.0
0.028.8
4.6
1.5
126.4
61.7
29.8
Composition o total unds under management at year end (Rbn)
Total unds under management at year end, split by undrawn commitments and investments (Rbn) 1
201220112010200920082007200620052004200320022001
28.2
7.7
35.9 37.0
39.3 39.742.5
59.2
86.3
109.3105.4
114.2 114.5
7.9 13. 8 13. 816.0
25.3
31.6
25.0 20.0
18.2
Undrawn commitments South Africa
Invested
29.1 25.5 25.9 26.533.9
68.870.4
78.3
17.2
83.9
54.7
126.4
19.9
91.1
15.515.0
17.713.4
15.4
Undrawn commitments Pan Africa
Investment
Holding Company
Captives
Other
Captives
Government
Captives
Financial Services
Independents
35.9
25.8
61.7
29.8
4.5
5.3
1.0Undrawn commitments (R35.3 bn)
Invested (R91.0 bn)
24.5
26.7
3.5
30.4
2.1
1.6
1.10.4
Total unds under management by type as at 31 December 2012, split by undrawn commitments and invested (Rbn) 1
1 Pan-Arican unds have an element o undrawncommitments that may be invested in South Arica
or other unspecied Arican countries.
A portion o the undrawn commitments is inclusive
o a provision or uture management ees.
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6 Highlights
201220112010200920082007200620052004200320022001
0.60.60.6
1.2 1.3
4.9
2.3 2.2
14.5
15.4
10.6
3.6
11.4
0.21.1
0.7
4.2
2.22.3
0.0 0.0
14.5
0.0
15.3
0.1
11.28.5
2.1
3.3
0.3 0.2
10.7
9.9
0.8
Later stage
Earlier stage0.5
14.4
13.9
Third party unds raised during the year, analysed by und stage (Rm)
0
0
0
0
0
0
62.0%
10,8%
15%
0.0%0.0%0.6%
11.6%
56.2%
14.2%
8%
3.8%
7.9%
13.9
0
20
40
60
80
45.4%
2.4%
5.4%
5.1%
8%
21.3%
12.3%
46.0%
6.2%
7.8%
5.1%2.1%
21.2%
11.5%
South Africa
United States
UK
Canada
Middle East
Other
Europe excl. UK
Funds raised
during 2012
Funds raised
during 2011
Funds raised
to 31 Dec 2012
not yet returned
to investors
Funds raised
to 31 Dec 2011
not yet returned
to investors
9.6%
0.0%
Geographic sources o third party unds raised
2012201120102009200820072006200520042003
25.4
5.2
5.31.51.9
5.8
10.5
4.53.6
7.0
12.3
12.0
2.8
10.1
17.2
14.8
2.2
12.3
7.9
22.7
16.1
14.0
28.4
7.8
18.4
35.1
19.9
16.3
11.6
23.8
31.1
12.1
21.2
15.38.4
14.8
27.440.8
26.522.0
Non-empowered/unclassified
Captives Government
Black influenced companies
Black empowered companies
Black companies
39.339.7
42.5
59.2
86.3
109.4 105.4
114.2
9.1
25.3
32.2
24.0
23.9
114.5
4.7
24.6
36.5
28.8
31.8
126.4
Funds under management by BEE und managers at year end (Rbn)
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KPMG and SAVCA Private Equity Survey 7
201220112010200920082007200620052004200320022001
2.0
0.4
2.41.4
3.50.8
4.31.8
1.3
6.4
4.6
1.5
6.9
1.4
26.1
8.2
18.9
2.9
7.2
5.6
11.8
Follow-on investments
New investments2.13.5
4.63.3
5.4
10.7
4.3
6.2
8.8
16.5
7.7
24.7
5.0
10.6
5.6
Cost o investments made during the year, analysed by new and ollow-on investments (Rbn)
201220112010200920082007200620052004200320022001
28.2
1.01.5
16.0
20.4
18.1
8.8
Vodacom disposal
Funds returned to investors
29.0
2.4
4.5 4.0 4.46.2
2.0
9.3
25.7
10.5
Venfin disposal7.01.0
1.5
2.4
4.54.0
10.5
6.2
2.0
25.7
7.0
Funds returned to investors during the year (Rbn)
Private Equity annual investment by independents as a percentage o GDP (%)
During 2012
During 2011
TurkeyPolandMENARussiaChinaJapanSSASouth
Africa
IndiaBrazilSouth
Korea
United
States
United
Kingdom
Israel
2.06
1.81
0.78
1.05 1.02
0.86
0.04
0.22
0.10
0.18
0.34
0.14 0.140.10 0.09 0.09 0.10 0.08
0.140.08 0.09 0.06
0.010.05
0.130.05
0.100.04
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8 Sources o inormation
Sources of information
The principal source o inormation or this survey was the survey questionnaire. In addition we have used
the SAVCA Handbook, held discussions with certain private equity industry participants, as well as sourced
public inormation on private equity unds, including international surveys.
The survey questionnaire was developed jointly by KPMG in South Arican and a specially constituted
SAVCA sub-committee.
For clarity, the guidelines or participation in this survey are as ollows:
Participants must:
Include investments i they are made in South Arica, regardless o where they are managed rom;
Have as their principal business the management o capital (third party and / or proprietary
capital) or the provision o capital (equity or quasi equity) primarily to unlisted companies;
Employ proessionals - dedicated to the management o the capital and the investments made
using the capital (and capital rom other providers); and
Aim to generate returns mainly through medium to long-term returns on investment and / or
social development returns.
We note that determining the level o private equity industry activity is not an easy task.
Whilst certain parties lobby or a more inclusive approach to measurement, others believe
that overstating the level o local activity is a disservice to the industry as this could
possibly reduce the appetite o Development Financing Institutions (DFIs) and oreign
investors to commit unds to South Arica in avour o other under-unded emerging
markets. The purists also argue that this survey should only measure the activity o
the independent unds, as these orm the core o the proessionally managed private
equity industry both locally and globally. This, however, would negate the signicant
role played by corporates, banks and DFIs in private equity in South Arica. For the
purposes o presentation, and elimination i deemed necessary by specic users,
we have presented data, wherever possible, split between the various types o
und managers.
Questionnaires were e-mailed to 126 (2011:95) entities that indicated that they
would consider participating in the survey. 95 (2011:56) o them (representing
102 unds (2011:73)) completed the questionnaire. In addition, alternative
sources were used to obtain inormation on a urther 15 private equity rms,
representing 15 unds, that did not complete the questionnaire. Although
these alternative sources did not provide us with as much inormation as our
questionnaire, we believe that the inormation is complete and understated,
i anything.
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KPMG and SAVCA Private Equity Survey 9
Other empirical data has been sourced rom various sources, including:
EMPEA Industry Statistics Fundraising & Investment Analytics 2012; Historical
Statistics Since 2003; Perormance Data Q3 2012 Data as o 4 February 2013
RisCura South Arican Private Equity Perormance Report Quarter ended:
31 December 2012
Statistics South Arica
Zephyr a Bureau van Dijk product
Other sources specically included in the ootnotes.
In compiling the inormation or this survey, KPMG has worked closely with a SAVCA
sub-committee, to try to ensure meaningul interpretation and comment has been
included in this report. The sub-committee reviews the document prior to its public
release, but does not have access to any o the individually completed questionnaires
submitted to KPMG or any other inormation not presented in this publication.
Although care has been taken in the compilation o the survey results, KPMG and
SAVCA do not guarantee the reliability o its sources or o the results presented.
Any liability is disclaimed, including incidental or consequential damage arising romerrors or omissions in this report.
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10 Introduction to private equity
Introduction to private equity
The term private equity reers to shareholder capital invested in private companies,
as distinguished rom publicly listed companies. Private equity unds are generally
investment vehicles that invest primarily in enterprises which are not listed on a public
stock exchange.
An enterprise may seek private equity nancing or a variety o applications, rom
increasing its working capital base in times o business expansion, developing new
technologies and products to grow and remain competitive, making acquisitions o
other businesses, to buying out certain shareholders to restructure the ownership and
management o the business. Another vital application o private equity in South Arica is
acilitating the introduction o BEE investment.
The role o private equity
Investments by private equity unds into companies hold great benets besides the
mere cash eect to develop businesses. Private equity investments have considerable
impacts in terms o productivity, skills development and job creation, as it includes the
transer and exchange o know-how and not only the fow o capital. Private equity und
managers play an active role in managing their investments in companies as they derive
a return rom the increased valuation o their investments (not just debt repaymentand an associated interest rate) and hence ocus on business development or the
companies they invest in.
In South Arica the private equity industry represents a signicant sector within the
overall nancial services industry, and an attractive asset class within the broader capital
markets. As seen across a range o indicators, the prole o the local private equity
industry is that o a productive contributor to the development o the South Arican
economy. These contributions are detailed in The Economic Impact o Venture Capital
and Private Equity in South Arica 2012 study, which is available rom SAVCA. In addition
private equity acilitates BEE, addresses economic imbalances o the past, promotes
entrepreneurial initiatives and positions South Arica to compete successully on the
global stage.
Through the use o leverage in certain transactions, private equity sponsors can assist
in improving the capital eciency o their investee companies.
As can be seen in this survey, private equity is an important source o Foreign Direct
Investment (FDI), both indirectly via the raising o oshore money by local und
managers but also by direct co-investment by oreign investors.
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KPMG and SAVCA Private Equity Survey 11
Investment stages
For the purposes o this survey we have broadly classied private equity into three
sub-classes, namely:
venture capital
development capital
buy-out unding
Figure 1: Private equity investment stages
Private equity
category
Stage o business
developmentTypical application
Venture capital Seed capital Funding or research, evaluation and development o a concept or
business beore the business starts trading.
Start-up and early stage Funding or new companies being set up or or the development o
those which have been in business or a short time (one to three years).
Development capital Expansion and development Funding or growth and expansion o a company which is breakingeven or trading protably.
Buy-out Leveraged buy-out or buy-in Funding to enable a management team or empowerment partner,
either existing or new, and their backers to acquire a business rom
the existing owners, whether a amily, conglomerate or other. Unlike
venture and development capital, the proceeds o a buy-out generally
go to the previous owners o the entity. Buy-outs are oten leveraged.
Replacement capital Funding or the purchase o existing shares in a company rom other
shareholders, whether individuals, other venture-backers or the public
through the stock market. Unlike venture and development capital, the
proceeds o replacement capital transactions are generally paid to the
previous owners o the entity.
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12 Introduction to private equity
Development o private equity in South Arica
Beyond being dened as a range o investment categories applicable to non-listed
companies, private equity is also a distinct asset class within the broader capital market,
and is supported by a well-dened industry made up o various players and stakeholders.
The current prole o the private equity industry in South Arica is the result o various
historical developments in the country and in global capital markets. In South Arica, theindustry was boosted by the large number o leveraged buy-outs and management buy-
outs (LBOs and MBOs), resulting rom the widespread disinvestment o multinationals
rom South Arica in the 1980s. These transactions were structured, nanced and
managed by the major commercial, merchant and investment banks o the time.
As these local banks developed the in-house expertise to manage private equity
investments on an internally unded basis, there was a global trend, especially in the US
and Europe (more specically the UK) towards the ormation and management o private
equity unds whose capital was sourced rom third party investors such as pension
unds, large corporations and other institutional entities.
In South Arica the private equity industry beneted rom the global trend towards
recognising the asset class as an attractive investment vehicle or investors, combined
with its growing reputation as an eective means o economic development or
Governments and development agencies. It may be argued that South Arica has one
o the more sophisticated private equity industries among emerging and developed
markets, with dierent unds at all stages o business development, rom start-up
venture capital unds through to late-stage and buy-out unds.
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KPMG and SAVCA Private Equity Survey 13
Types o private equity frms
A distinction needs to be made between captive and independent und managers.
Fund managers include Independents who manage unds on behal o third parties
as well as Captives who manage on-balance sheet investments that were unded by
a parent or group oten rom an indeterminate pool o money. Captive unds are or
the purpose o this survey urther classied into the captive unds o Government,
nancial services (including banks and insurance companies) and other captive unds(including corporates). A urther category o unds were included in the 2011 survey
or Investment Holding Companies 2
Independent und managers raise cash commitments rom third party investors.
Generally, in terms o the agreement between the third party investors and the private
equity und manager, the private equity rm draws down on the commitments as and
when investments are to be made. Independents are the dominant type o rm in
the UK, the rest o Europe and in the US, where these unds are structured as limited
partnerships. Private equity rms typically act as the general partner o the limited
partnership, whilst institutions and other investors become limited partners.
Unlike captive unds, independent unds are usually closed ended. This means that
once a und has been raised, it is closed out, ollowing which no urther commitmentsare accepted rom third parties. Typically, third parties commitments expire, oten
according to a time schedule based on a use it or lose it principle, once a maximum
drawdown time period expires. Proessional private equity managers usually earn
income rom a combination o a management ee based on total commitments plus an
enhanced carried interest, which is based on the perormance o the und relative to a
benchmark. Captive und managers usually do not charge any management ee.
2 An investment vehicle that acts as a holding company
by owning shares o other companies. Investment
Holding companies typically do not have committed
investable sources o capital rom third parties (as
the case with Independents); and typically are able to
have longer term investment holding periods 2013 KPMG Services Proprietary Limited, a South Arican company and a member rm o the KPMG network oindependent member rms aliated with KPMG International Cooperative (KPMG International), a Swiss entity.All rights reserved. Printed in South Arica. MC10034
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Black Economic Empowerment
One o the notable eatures o South Aricas private equity industry is the very
signicant role it plays in the development o BEE. The industrys impact on BEE is ar
reaching, as detailed in the various sections o this survey. It is specically important to
note that:
The Codes o Good Practice or Broad-Based BEE (BEE Codes), issued by the
Department o Trade and Industry (DTI), stipulate the conditions under which
a company may treat its ownership arising rom a private equity und as i that
ownership were held by black people. These requirements were nalised in June
2007 and provide the industry clarity on how to urther increase its already signicant
contribution on this vital socio-economic process. The requirements can be
summarised as ollows:
- More than 50% o any exercisable voting rights associated with the equity
instruments through which the private equity und manger holds rights o
ownership must be held by black people.
- More than 50% o the prots made by the private equity und manger ater realising
any investment made by it, must by written agreement, accrue to black people.
- The private equity und manger must be a black-owned company, as dened in the
BEE Codes.
- Over a 10-year period, the private equity und must have more than 50% o the
value o unds invested, invested in black-owned enterprises that have at least 25%
direct black ownership.
Private equity transactions enable higher gearing, whereby a combination o private
equity investment and bank loans allow the implementation o an appropriately
geared nancial structure, allowing management o the investee company to acquire
a signicant stake in the company. This leveraged model also creates opportunities
or the involvement o black management and other BEE parties in the ownership and
management o the investee company.
The vast majority o transactions concluded by the industry have a signicant BEE
component and the majority o private equity und managers have a BEE element to
their own shareholding structure.
14 Black Economic Empowerment
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16 Funds under management
Funds under management
The survey shows that South Aricas private equity industry now has a total o R126.4
billion unds under management (inclusive o undrawn commitments o R35.3 billion).
This is a R11.9 billion (10.4%) increase rom unds under management at 31 December
2011 o R114.5 billion (inclusive o R30.6 billion undrawn commitments).
The industry has achieved a compound annual growth rate o 11.6% o total unds under
management (excluding undrawn commitments) since 1999 when the survey began.
In analysing the research it is important to note that, only comparative 2011 inormation
has been restated but not pre-2011 inormation. This is in order to take into account
participants updated returns and also due to the inclusion or exclusion o unds that did
or did not participate in the 2011 survey.
Funds under management by Independents have increased total unds under
management by R4.2 billion rom R57.5 billion at 31 December 2011 to R61.7 billion at
31 December 2012.
Captives-Financial Services total unds under management increased by R8.1 billion
rom R21.7 billion at 31 December 2011 to R29.8 billion at 31 December 2012.
General unds remain dominant, with more than two thirds o the unds under
management at 31 December 2012 in the category o General/ No specic ocus
(92.0%).
Total undrawn commitments at 31 December 2012 are R35.3 bil lion (2011: R30.6
billion), o which R25.8 billion (2011: R 23.3 billion) refects the undrawn commitments
o independent und managers.
Captives-Government and und managers that themselves black-owned, empowered
or infuenced (that is, have at least 5.0% black ownership) had R94.6 bill ion at 31
December 2012, a increase o 4.4% (2011: R90.4 billion).
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KPMG and SAVCA Private Equity Survey 17
Figure 2: Total unds under management
2009 R105.4bn2010 R114.2bn
2011 R114.5bn2012 R126.4bn
24%
Captives
Government
R30.4bn
(6 firms)
Captives Other
R3.0bn (6 firms)
Independents
R61.7bn
(47 firms)
Captives Financial
Services R29.8bn (13 firms)
2%
1%
48,8%
19%
Captives
Government
R24.0bn
(6 firms)
Captives Other
R10.3bn (10 firms)
Independents
R57.5bn
(42 firms)
21%
1%
50,2%
21%
Captives
Government
R21.1bn
(4 firms)
Captives Other
R12.3bn (10 firms)
Independents
R54.8bn
(55 firms)
11%
18%
2%
48,0%
38%
Captives
Government
R12.1bn
(1 firms)
Captives Other
R5.3bn (7 firms)
Independents
R48.2bn
(37 firms)
11%
5%
45,8%
Investment Holding
Company
R1.6bn (2 firms)
Investment Holding
Company
R2.0bn (0 firms)
24%
9%
Investment Holding
Company
R0.9bn (8 firms)
Captives Financial
Services R21.7bn (11 firms)
Captives Financial
Services R24.0bn (16 firms)
Captives FinancialServices R39.7bn (10 firms)
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18 Funds under management
Figure 3: Composition o total unds under management
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
59.2
24.7
12.3
6.4
86.3
31.2
14.0
10.5
109.4
39.7
12.1
5.3
105.4
21.2
Captives Other
Captives Government
Captives Financial Services
Independents
12.3
2.0
114.4
12.0 15.2 14.2 13.9
24.5
53.7
48.3
54.9
24.0
30.4
3.01.5
126.4
61.7
29.8
24.0
10.30.9
114.5
57.5
21.7
42.9
Investment Holding Company0.0 0.00.0 0.0
0.0
0.0
0.0
0.00.0
Figure 4: Composition o total unds under management at year end by the ocus o
the und (Rbn), includes Pan-Arican unds 3
4.8 2.2-2.8
23.9
0.7
92.0
General/No specific focus
ICT
Infrastructure
Real Estate
Mining and Resources
Other
Mezzanine
2012 R126.4bn
3.1 2.5-2.8
22.8
0.7
82.7
2011 R114.5bn
3 The total unds under management includes
Pan-Arica unds who have an element o undrawn
commitments that may be invested in South Arica
or other unspecied Arican countries.
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KPMG and SAVCA Private Equity Survey 19
Figure 5: Total unds under management at year end, split by undrawn commitments and investments (Rbn) 4
201220112010200920082007200620052004200320022001
28.2
7.7
35.9 37.039.3 39.7
42.5
59.2
86.3
109.4
105.4
114.2 114.5
7.9 13.8 13.816.0
25.3
31.6
40.6 35.0
35.9
Undrawn commitments
Invested
29.1 25.5 25.9 26.5 33.9
68.8 70. 4
78.3
30.6
83.9
126.4
35.3
91.1
54.7
Figure 6: Total unds under management by type as at 31 December 2012, split by undrawn commitments and invested (Rbn) 4
Investment Holding
Company
Captives
Other
Captives
Government
Captives
Financial
Services
Independents
35.9
25.8
61.7
29.8
4.6
5.3
3.5
1.1Undrawn commitments (R35.3 bn)
Invested (R91.0 bn)
24.5
26.7
10.2
28.8
2.1
1.6
1.10.5
4 A portion o the undrawn commitments is inclusive
o a provision or uture management ees.
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20 Funds under management
Figure 7: Total unds under management at year end, split by invested and geographical undrawn commitments (Rbn)
201220112010200920082007200620052004200320022001
28.2
7.7
35.9 37.039.3 39.7
42.5
59.2
86.3
109.3105.4
114.2 114.5
7.9 13 .8 13 .816.0
25.3
31.6
25.0 20.0
18.2
Undrawn commitments South Africa
Invested
29.1 25.5 25.9 26.533.9
68.870.4
78.3
17.2
83.9
54.7
126.4
19.9
91.1
15.515.0
17.713.4
15.4
Undrawn commitments Pan Africa
Figure 8: Classifcation o undrawn commitments by stage o investments (Rbn)
20122011201020092008
36.8
3.7
40.5
35.0
1.9
35.525.2
33.1
Later stage
Early stage
35.9
30.6
0.4
5.4
30.1
35.3
5.2
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KPMG and SAVCA Private Equity Survey 21
Figure 9: Classifcation o undrawn commitments by type o und manager (Rbn)
20122011201020092008
28.1
2.4
2.1
8.0
40.5
35.0 35.9
11.2
0.6
9.6
2.2
0.5
23.2 23.5
Independents
Captives Financial Services
Captives Government
Captives Other
Investment Holding Company
0.00.1 30.6
5.5
1.7
23.0
0.1
0.2
35.3
5.3
1.0
25.8
2.1
1.1
Figure 10: Composition o later stage, independent undrawn commitments by ocus o the und (Rbn) 5
20122011201020092008
12.7
12.3
0.30.4
25.7
21.1
23.1
12.4
15.9
General / No specific focus
Mining and resources
Other
8.5
0.30.0
6.8
0.4
0.0
18.0
12.8
4.5
0.7
0.0
20.6
12.9
6.1
1.6
0.0
Mezzanine
5 A portion o the undrawn commitments is inclusive
o a provision or uture management ees.
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22 Funds under management
Figure 11: Funds under management by BEE und managers at year end (Rbn)
0
0
0
0
0
2012201120102009200820072006200520042003
25.4
5.2
5.31.51.9
5.8
10.5
4.53.6
7.0
12.3
12.0
2.8
10.1
17.2
14.8
2.2
12.3
7.9
16.1
22.714.0
28.4
7.8
18.4
35.1
19.9
16.3
11.6
23.8
31.1
12.1
21.2
15.38.4
14.827.4
40.8
26.522.0
Non-empowered/unclassified
Captives Government
Black influenced companies
Black empowered companies
Black companies
39.3 39.742.5
59.2
86.3
109.4 105.4
114.2
9.1
25.3
32.2
24.0
23.9
114.5
4.7
24.6
36.5
28.8
31.8
126.4
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KPMG and SAVCA Private Equity Survey 23
Comparison to the global market
Although the South Arican private equity industry is small in comparison to those o the
US and UK, it is well established and locally signicant.
Using the available EMPEA inormation, but recalculating the South Arican
percentages using the South Arican survey data, South Arica has Investment activity
as a percentage o GDP or 2012 o 0.10% (2011: 0.14%). The calculation relates toinvestments made by Independents only in order to compare directly with the EMPEA
data. South Aricas Private Equity Investment as a percentage o GDP is higher than
China (0.08%) and Russia (0.06%), but behind Brazil (0.18%), India (0.14%). It is still
some way o that o the United States (0.86%), the United Kingdom (1.05%) and Israel
(1.81%).
Figure 12: Private Equity annual investment by independents as a percentage o GDP% 6
During 2012
During 2011
TurkeyPolandMENARussiaChinaJapanSSASouth
Africa
IndiaBrazilSouth
Korea
United
States
United
Kingdom
Israel
2.06
1.81
0.78
1.05 1.02
0.86
0.04
0.22
0.10
0.18
0.34
0.14 0.140.10 0.09 0.09 0.10 0.08
0.140.08 0.09 0.06
0.010.05
0.130.05
0.100.04
6 O the ve categories o unds used in the
KPMG/SAVCA Survey, EMPEA only includes
Independents. All captives, whether nancial
services, government or other are excluded.
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24 Funds under management
The gure below uses EMPEA data or Russia/CIS, India, China and Brazil, with South
Arican data collated rom the survey. This calculation relates to Independents only in
order to compare directly with the EMPEA data.
Figure 13: Emerging markets private equity und raising totals by select markets US$Rbn 7
2012201120102009200820072006200520042003
4.3
2.1
2.9
0.20.2
0.2
0.50.30.70.20.4
0.20.7
1.5 2.1
0.2
2.2
2.7
1.3
0.3
6.7
0.2
2.0
11.5
2.5
4.6
3.9
2.3
15.1
1.8
3.6
7.7
14.5
0.9
1.1
27.7
0.4
0.5
6.6
4.0
0.4
11.9
7.5
0.1
3.3
1.5
13.5
1.1
7.1
16.6
2.7
0.7
27.3
Brazil
China
India
Russia/CIS
South Africa
0.1
2.6
10.8
2.1
1.0
16.9
0.4
7 EMPEA Industry Statistics Fundraising &
Investment Analytics 2012; Historical Statistics
Since 2003; Perormance Data Q3 2012 Data as
o 4 February 2013.
South Arican totals are based on inormation
supplied by the participants in the 2012 survey
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KPMG and SAVCA Private Equity Survey 25
The data tables below rom Zephyr have been updated to refect South Arican data as
per this survey. The South Arican data includes the total investments or the 2012 year,
but excludes Business Partners. Business Partners, which has many small deals, was
excluded or comparative purposes as many o these smaller deals are not reported and
thereore in all likelihood are not included in the comparative Zephyr data.
Figure 14 : Country ranking 8
Country Ranking - Deal Value during 2012(US$ million)
1 United States O America 34 199 11 South Arica 1 177 21 Israel 367
2 United Kingdom 12 247 12 Russian Federation 1 129 22 Luxembourg 289
3 France 4 184 13 Spain 1 014 23 Belgium 287
4 Sweden 3 098 14 Germany 910 24 Poland 285
5 Brazil 2 823 15 Denmark 899 25 Japan 274
6 Australia 2 176 16 Norway 758 26 Morocco 243
7 Italy 2 085 17 United Arab Emirates 695 27 New Zealand 203
8 India 1 346 18 Hong Kong 649 28 Indonesia 198
9 China 1 298 19 Canada 478 29 Korea Republic O 125
10 Chile 1 210 20 Cayman Islands 433 30 Ireland 122
Figure 15: Country ranking 8
Country ranking Number o deals during 2012
1 United States O America 417 11 Italy 25 21 Ireland 7
2 South Arica 164 12 Netherlands 20 22 New Zealand 7
3 United Kingdom 141 13 Brazil 16 23 Austria 6
4 France 130 14 Israel 15 24 Poland 65 India 60 15 Finland 14 25 Switzerland 5
6 Germany 52 16 Australia 12 26 Japan 4
7 Spain 43 17 Russian Federation 12 27 Turkey 4
8 Canada 37 18 Belgium 11 28 Singapore 4
9 Sweden 33 19 Denmark 11 29 Korea Republic O 4
10 China 30 20 Norway 11 30 Portugal 3
8 Inormation supplied by Zephyr, a BvD product.
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26 Funds under management
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KPMG and SAVCA Private Equity Survey 27
The total o third party unds raised in 2012 increased by 34.8% rom R10.7 billion during
2011 to R14.4 billion during 2012.
The majority o reported und raising activity during 2011 (55.3%) and 2012 (59.9%) was
by Independents.
The major und raisers or 2012 were Ethos Private Equity, OMIGSA Alternative
Investments and Vantage Risk Capital.
In 2011 the major und raisers included Arican Inrastructure Investments Managers,
Ethos Private Equity, OMIGSA Alternative Investments and Phatisa.
O the total R14.4 billion raised in 2012, R6.3 billion (43.8%) was rom oreign sources.
36.3.0% o all third party unds raised during 2012 were rom pension and endowment
unds (2011: 40.7%). Government, aid agencies & DFIs accounted or 25.0% (2011:
28.1% and Insurance companies 16.4% in 2012 (2011: 16.3%).
South Arica contributed 56.2% o unds raised during 2012 (2011: 62.0%).
Cumulatively, o the unds raised but not yet returned to investors, South Arica is the
main source o und raising (46.02%), ahead o the UK (21.2%) and the US (11.5%).
26.9% o cumulative third party unds raised and not returned to investors were romGovernments, Aid Agencies and DFIs as at 31 December 2012, ollowed by pension and
endowment unds (20.7%) and Insurance Companies or Institutions (14.5%).
Fund raising activity
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28 Fund raising activity
Figure 16: Third party unds raised during the year, analysed by und stage (Rbn)
201220112010200920082007200620052004200320022001
0.6
0.6
1.2 1.3
4.9
2.3 2.2
14.5
15.4
10.6
3.6
11.4
0.21.1
0.7
4.2
2.22.3
0.0 0.0
14.5
0.0
15.3
0.1
11.2
8.5
2.1
3.3
0.3 0.2
10.7
9.9
0.8
14.4
13.9
0.4
Later stage
Earlier stage
Figure 17: Source o third party unds raised during 2012 (Rbn)
25.08
Local source (R 8.1 billion)
Foreign source (R 6.3 billion)
CorporatesPrivate
individuals
Govt aid
agencies& DFIs
BanksPension &
endowment
Insurance
companies
Private Equity
fund of funds
2.3
5.2
3.6
2.2
2.4
1 450
0.5
0.6
3.3
0.3
0.30.1
1 750.0
3.3
0.2
0.2 0.0
0.1
4.7
2.3
0.6
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KPMG and SAVCA Private Equity Survey 29
Figure 18: Source o third party unds raised during 2011 (Rbn)
25.08
Local source (R 6.6 billion)
Foreign source (R 4.1 billion)
CorporatesPrivate
individuals
Govt, aid
agencies &
DFIs
BanksPension &
endowment
Insurance
companies
Private Equity
fund of funds
0.6
4.4
3.8
3.0
3.8
0.2
1.7
1 450
0.3
0.2
0.5
2.5
1.7
0.0
0.0
0.6
0.0
0.0
2.5
0.6
0.5 0.40.0
Figure 19: Source o third party unds raised to 31 December 2012 not yet returned to investors (Rbn)
Local source (R 31.1 billion)
Foreign source (R 36.6 billion)
Other /
Undisclosed
Private
individuals
CorporatesBanksInsurance
companies
Pension &
endowment
Govt, aid
agencies
& DFIs
Private
Equity fund
of funds
1.5
11 350
5.8
14.0
6.6
9.8
2.4
18.2
1.7
0.9 1.2
11.1
2.9494.6
0.21.0
9.7
1.1
5.7
1.2
16.5
4.3
9.7
9.0
0.8
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30 Fund raising activity
62.0%
10.8%
15.0%
0.0%0.0%
11.6%
56.2%
14.2%
8.0%
9.6%
0.0%3.8%
7.9%
13.9
0
20
40
60
80
100
45.4%
2.4%
5.4%
5.1%
8.0%
21.3%
12.3%
46.0%
6.2%
7.8%
5.1%
2.1%
21.2%
11.5%
South Africa
United States
UK
Canada
Middle East
Other
Europe excl. UK
Funds raised
during 2012
Funds raised
during 2011
Funds raised
to 31 Dec 2012
not yet returned
to investors
Funds raised
to 31 Dec 2011
not yet returned
to investors
0.6%
Figure 20: Geographic sources o third party unds raised
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KPMG and SAVCA Private Equity Survey 31
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32 Investment activity
The reported value o private equity investments decreased by 35.8%% rom R16.5
billion during 2011 to R10.6 billion during 2012. The total number o investments
decreased by 53, rom 537 to 484 during the same period.
New Investments during 2012 amounted to R5.6 billion (2011: R7.7 billion) and
Follow-on Investments during 2012 amounted to R5.0 billion (2011: R8.8 billion)
The overall average investment deal size decreased rom R30.7 million or the 2011 yearto R21.9 million during 2012. New investments average deal size decreased rom R21.2
million during 2011 to R19.2 million during 2012 while ollow-on investments average
deal size decreased rom R50.6 million during 2011 million to R26.2 million during 2012.
In terms o the number o reported investments, Business Partners, classied as
Captives-Other, was again by ar the most active investor in the South Arican private
equity market, contributing 320 (66.1%) o the total number o reported investments
made during 2012 (2011: 353, 65.7%), although 5.8% in terms o the cost o total
investments made during 2012 (2011: 4.0%). Business Partners average deal size
was R1.92 million in 2012 compared to R1.85 million in 2011.
I Business Partners investments are excluded, the total average deal size during 2012
increases to R60.9 million (2011: R86.0 million), new investments average deal size
during 2012 decreases to R71.8 million rom R74.0 million during 2011 and ollow-on
investments average deal size during 2012 decreases to R52.7 million rom R99.4
million during 2011.
Captives-Financial Services and Independents dominated investment activity by
value during 2012. By number, Captives-Other has the largest number o deals, as
this category includes investments made by Business Partners.
O the investments made during 2012 classied into sectors, 13.3% were in the
manuacturing sector, 27.5% in the Inrastructure sector and 2% in the mining and
natural resources sector.
Due to some large retail deals in 2007 and 2008 (House o Busby, Tiger Automotive,
Edcon etc) on a cumulative basis the retail sector still represents 13.7% o unds
invested as at 31 December 2012. Inrastructure comprises 16.6% o all unrealized
investments at 31 December 2012, with manuacturing making up 22.7% and
mining and natural resources 11.7%.
The cost o investments into seed, start-up and early stage entities contributed
9.3% o cumulative unrealised investments at 31 December 2012 (2011: 6.1%).
This represented 16.3% o the number o investments at 31 December 2012
(2011:18.3%), which is indicative o the proportionally smaller transaction values
or the early stage types o deals.
Buy-outs as a proportion o investments made by cost, decreased rom
36.0% in 2011 to 31.4% in 2012.
Investment activity
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KPMG and SAVCA Private Equity Survey 33
Figure 21: Cost o investments made during the year, analysed by new and ollow-on investments (Rbn) 9
201220112010200920082007200620052004200320022001
2.0
0.4
2.41.4
3.50.8
4.31.8
1.3
6.4
4.61.5
6.9
1.4
26.1
8.2
18.9
2.9
7.2
5.6
11.8
Follow-on investments
New investments2.13.5
4.63.3
5.4
10.7
4.3
6.2
8.8
16.5
7.7
24.7
5.0
10.6
5.6
Figure 22: Number o investments made during the year, analysed by new and ollow-on investments (Rbn)
201020112010200920082007200620052004200320022001
534
261
795
229
178
187
227
245
235
265
150
188
651
581
627
730
806834
723
618
547
Follow-on investments
New investments
422 403 440
503
561
458468
359
599
537
484
174
192
363292
9 For the 2009 year we have also excluded two investments, due to
the lack o inormation on these investments other than enterprisevalue. These were the acquisition by Denham Capital o shares inan SA-based energy rm, Bio Therm Energy, with a transactionvalue o R1.5bn and the acquisition o a signicant shareholdingin Medi-Clinic Corporation by European based private equityund, Lehman Brothers Merchant Bank, with a transaction valueo R1.3bn* The investment by Brait (as an investment holdingcompany) in Pepkor and Premier Foods in 2011 or approximatelyR5 billion has also been excluded.
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34 Investment activity
Figure 23: Cost (Rbn) and number o investments made during the year, analysed by type o und manager
0
5
0
5
20122011
7.4
1.3
0.2
3.4
4.1
4.8
0.6
16.5
10.6
2.0
0.3
0.5
3.0
20122011
47
13
6
5
4
537
484
338
79
57
379
93
Captives Financial Services
Independents
Captives Other
Captives Government
Investment Holding Company
Costofinvestments(Rbn)
Numberofinvestments
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KPMG and SAVCA Private Equity Survey 35
Figure 24: Investments made during the year, analysed by sector 10
During 2012
During 2011
M
edia
Telec
oms
Health
care
Services
Information
techno
logy
Banks,
fina
ncial
services
and
insur
ance
Infrastructure
Mining&
naturalresou
rces
Manufacturing
Entertainm
ent,
leisu
re&
tou
rism
R
etail
37.3%
27.5%
1.9% 2%
7.4%
13.3%
2.7%
5.1%6.1%
18.5%
8.8%
2.2%
0.4%0.6%
3.2%3.2%
1.6%
5%
0.4%0.9%
0.1%0.8%
10 14% (R1.5 billion) o investments made during 2012were classied in the other sector category or notclassied at all (2011: 37% / R6.0 bill ion). These havebeen excluded rom the above analysis.
KPMG and SAVCA Private Equity Survey 35
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36 Investment activity
Figure 25: Unrealised investment portolio at year end, analysed by sector 11
During 2012
During 2011
Entertainment,
leisure&
t
ourism
Telecoms
Hea
lthcare
S
ervices
Infor
mation
tech
nology
Banks,financial
servicesand
ins
urance
Infrastructure
Retail
Manufa
cturing
Media
Mining&
naturalres
ources
16.7%
15.6%
11.7%
13.7%
24.3%
22.7%
14%
11.7%
-2%
7.7%
5.6%6.2%
2.3%1.9%
3.1%2.6%
3.5% 3.8%
2.1%1.5% 1.3%
0.6%
11 13% (R12.8 billion) o the unrealised investment portolioat 31 December 2012 was classied in the other sectorcategory or not classied at all (2011: 17% / R13.9 bill ion).These have been excluded rom the analysis shown.
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KPMG and SAVCA Private Equity Survey 37
Figure 26: Analysis o investments by stage based on cost o investments
0
0
0
0
0
0
Investements
made during2012
Investments
made during2011
8.7%
36.0%
50.8%
4.4%0.0%
31.4%
16.6%
45.7%
6.3%
0.0%%
15.214.3 13.9
0
20
40
60
80
100
120
Unrealised
investementsat 31 Dec 2012
Unrealised
investments at31 Dec 2011
12.9%
31.8%
49.1%
4.9%
1.2%
36.2%
9.5%
45.0%
7.8%
1.5%
15.214.3 13.9
Seed Capital
Start up and early stage
Expansion and development
Replacement capital
Buyout
Figure 27: Analysis o investments by stage based on number o investments 12
0
0
0
0
0
0
0
Investements
made
during 2012
Investments
made during
2011
Unrealised
Investments at
31 Dec 2012
Unrealised
Investments at
31 Dec 2011
7.6%
18.8%
57.5%
16.0%
0.0%
19.6%
7.6%
60.1%
12.6%
0.0%
15.2
10.7%
16.5%
54.6%
17.3%
17.7%
10.1%
55.9%
15.4%15.2 14.3 13.9
Seed Capital
Start up and early stage
Expansion and development
Replacement capital
Buyout
1.0% 0.9%
12 Investments not classied by stage have been excluded.
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38 Investment activity
Figure 28: The fgure below provides an analysis o the largest reported private equity transactions in 2012
Name oinvestment
Equityprovider/s
Debtprovider/s
Total undingraised (Rm)
Type oinvestment
PE Fund'sequity interest
Part osyndication
BEE ownership(post deal)
Waco Ethos & RMB
Ventures
Standard
Bank
> R 1 500 Replacement
capital
Controlling
Interest
Yes Black Infuenced
Capitec
Bank
Public
Investment
Corporation
Not
disclosed
R 825.0 Replacement
capital
5.3% No Black
empowered
company
Trudon Trinitas
Private Equity
Partnership,
RMB Corvest &
Nodus Capital
Investec R 740.0 Replacement
capital
35% Yes Black
empowered
company
Serica
Investment
Holdings
Trinitas
Private Equity
Partnership
Investec R 200.0 Replacement
capital
50% No Not empowered
Main StreetHoldings TrinitasPrivate Equity
Partnership
FNB R 140.5 Replacementcapital
61% No Not empowered
Staycold Ethos/
Universal
Industries
Nedbank R 130.0 Replacement
capital
Controlling
Interest
No Not empowered
Wekaba
Engineering
Medu Capital Standard
Bank
R 108.0 MBO Controlling
Interest
No Black
empowered
company
Transaction
Capital
Ethos N/A R 95.2 Later stage
expansion
capital
n/a No Not empowered
Cerebos Investec Notdisclosed
R 54.9 LBO Not disclosed No Blackempowered
company
Boxmore
Plastics
Investec Not
disclosed
R 52.8 Follow-on Not disclosed No Black
empowered
company
* Capitalworks acquired Rhodes FoodGroup or an undisclosed amount
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KPMG and SAVCA Private Equity Survey 39
Figure 29: The fgure below provides an analysis o the Top 10 largest reported private equity transactions in 2011
Name oinvestment
Equityprovider/s
Debtprovider/s
Total undingraised (Rm)
Type oinvestment
PE Fund'sequity interest
Part osyndication
BEE ownership(post deal)
Tracker Actis, MIC,
RMB
Nedbank,
StandardBank, RMB
R 3 900 Replacement
capital
40% Yes Black
empoweredcompany
Liberty Star OMPE Not
Discolosed
R 2 065 Replacement
capital
15% No Black company
Universal
Industries
Ethos Nedbank R 1 300 LBO Controlling
interest
No Not empowered
Kevro Ethos Nedbank R 850 LBO Controlling
interest
No Not empowered
Lodestone
Brands
Standard
Chartered
Private Equity
Not
Discolosed
R 300 Later stage
expansion
capital
Not Discolosed No Not Discolosed
Ariresh Group Standard
Chartered
Private Equity
Not
Discolosed
R 232 Later stage
expansion
capital
30% No Not Discolosed
Ferro Industrial
Products
Investec Investec R 187 LBO Not Discolosed No Not empowered
Vox Telecom Investec Not
Discolosed
R 172 LBO Not Discolosed No Black
empowered
company
Teraco Treacle DBSA R 157 Early stage
expansion
capital
Not Discolosed No Black
empowered
company
Alexander
Forbes
Ethos Not
Discolosed
R 100 Replacement
capital
Not Discolosed No Black infuenced
company
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40 Analysis of BEE investments
The cost o investment into entities that are at least black infuenced companies in
2012 was R6.2 billion, a decrease o 22.7% rom 2011 levels. The number o BEE
investments increased rom 183 during 2011 to 192 during 2012. These levels o
activity, when compared to M&A activity in South Arica, refects that private equity
BEE investments are an important element o the South Arican economy.
The average black economic empowerment deal size in 2012 was R32.4 million
compared to R43.0 million during 2011. These are investments into black owned,
empowered or infuenced companies.
Figure 30: Cost o BEE investments made during the year (Rbn) (excluding Captives - Government)
2012201120102009200820072006200520042003
1.7%
2.9
1.7
0.0
4.7
0.3 0.61.1
1.9
0.1
3.1
1.2
1.8
3.6
0.6
0.5
1.43.4
6.1
2.4
11.8
5.5
1.7
2.7
2.5
3.3
8.5
5.2
2.4
0.4
8.0
2.8
1.1
5.6
5.0
2.7
13.2
Black companies
Black empowered companies
Black influenced companies3.5
0.9
1.8
6.2
Figure 31: Number o investments made during the year (excluding Captives Government)
2012201120102009200820072006200520042003
26
144
15
185
51
203
268
227
52
287
251
79
341
284
74
390
70
32
16
319
233
173
49
39Black companies
Black empowered companies
14
8
11
18
240
150
20
209
120
53
10
183
Black influenced companies119
49
24
192
Analysis of BEE investments
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KPMG and SAVCA Private Equity Survey 41
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42 Exits
Exits
Funds returned to investors decreased by R18.8 billion rom R25.7 billion during 2011
to R7.0 billion during 201213.
The value o disposal proceeds14 decreased rom R17.2 billion in 2011 to R3.2 bil lion
during 2012. Disposals to trade sale was the most popular in value terms. Sale to
another private equity rm or nancial institution was the next most popular method
o disposal.
The average proceeds per disposal have decreased rom R22.4 million in 2011 to
R3.7 million in 2012.
Figure 36 shows that the reported prot (proceeds less cost o investment) on disposals
o R1.9 billion during 2012 was substantially lower than the R14.1 billion during 2011.
The trade sale category was the main contributor in 2012 with R1.2 billion, however,
or 2011 the sale to another private equity rm category with R10.3 billion was the
largest contributor.
The implied times money back multiple during 2012 was 2.9 times, signicantly lower
than the 6.9 times reported or 2011 disposals.
13 Included in the total o R11,3 billion or 2011 Sale toanother private equity rm or nancial institution isR5.2 billion resulting rom the purchase by Brait SE(listed investment holding company) o the interest heldby private equity unds in Pepkor Holdings Limited and
Premier Group (Pty) Limited.
14 Disposal proceeds exclude the proceeds on therepayment o preerence shares/loans, proceeds romdisposals or a nominal amount and dividend andinterest payments.
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KPMG and SAVCA Private Equity Survey 43
Total unds returned to investors
201220112010200920082007200620052004200320022001
28.2
1.01.5
16.0
20.4
18.1
8.8
Vodacom disposal
Funds returned to investors
29.0
2.4
4.5 4.0 4.46.2
2.0
9.3
25.7
10.5Venfin disposal
7.0
7.0
25.7
10.5
6.2
2.0
4.04.5
2.4
1.51.0
Figure 33: Proceeds o unds returned to investors during the year (Rbn) (Excluding Venfn disposal)
During 2012 (R 7.0 billion)
During 2011 (R 25.7 billion)
Saletom
anagementwith
noequityinvolvmentof
anotherfinancialinstitution
Write
-offsincluding
salesforanominalfee
Dividendsand
in
terestpayments
Sh
arebuy-backby
po
rtfoliocompany
ListingorIPO
Tradesale
Saleoflistedshares
Repaymentof
preference
shares/loans
Other/Unspecified
Saletoanother
privateequityfirm
orfinancialinstitution
0.6
11.3
0.9
4.9
1.9
3.1
0.1
2.2
1.5
1.9
0.3
0.8
0.2
0.7
0.40.30.10.0
0.9
0.5
Figure 32: Funds returned to investors during the year (Rbn)
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44 Exits
Disposals
Figure 34: Analysis o disposals made during the year based on proceeds (Rbn) (excludes the Vodacom disposal during 2006 and
the Venfn disposal in 2010)
20122011201020092008200720062005200420032002
28.2
00.10.4
0.3
0.0
0.8
0.2
0.5
0.30.7
1.9
1.6
0.0
0.7
0.6
0.5
3.4
1.0
3.2
0.5
0.3
1.3
0.1 0.01.00.5
0.8
0.8
3.1
0.1
4.0
2.9
0.4
1.7
9.1
0.31.4
0.3
2.7
0.4
0.1
4.9
0.1
0.4
0.1
0.1
0.1
0.8
65.91
0.5
1.6
0.9
0.2
1.7
4.8
0.8
11.3
1.9
0.3
2.9
17.2
Share buy-back by portfolio
company
Sale to another private equity
firm/financial institution
Trade sale
Sale to management
(buy-back)
Sale of listed shares and IPOs
0.3
0.6
1.5
0.40.3
3.2
Figure 35: Analysis o number o disposals made during the year based on proceeds (excludes the Vodacom disposal during 2006
and the Venfn disposal in 2010)
20122011201020092008200720062005200420032002
35
28
3
6
0
72
16
7
4
16
105
16
78
18
2
19
133
4
129
4
28
8
85 86
8
617
108
90
24
11
2
8
135
62
80
42
22
90
6
5
43
62
44 44
11
12
9
10
86
40
11
12
4
10
77
Sale to management
(buy-back)
Sale to another private equity
firm/financial institution
Sale of listed shares and IPOs
Trade sale
Share buy-back by portfolio
company
50
16
5
7
8
86
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KPMG and SAVCA Private Equity Survey 45
Proceeds
Cost
Sharebuy-back
byportfolio
Saleoflistedshares
Tradesale
Saletoanother
privateequityfirm
orfinancialinstitution
Total
2.9
1.0
0.6
0.3
0.1
0.2
1.5
0.3 0.3
0.4
0.1 0.1
Saletomanagement
(Buy-back)
Figure 36: Proceeds and cost o investments made during 2012 (Rbn)
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46 Exits
Figure 37: Proceeds and cost o investments made during 2011 (Rbn)
Proceeds
Cost
Sharebuy-back
byportf
oliocompany
Saleo
flistedshares
andIPOs
Tradesale
Saletoanother
priva
teequityrm
ornanc
ialinstitution
Total
16.5
2.42.2
0.4
11.3
1.1
1.9
0.7 0.80.3
0.1 0.1
Saleto
management
(Buy-back)
Write-os
60 investments were written o during 2012, inclusive o sales or nominal amounts
(2011: 32 investments). The net loss on these investments (cost less proceeds) was
R175.6 million in 2012 (2011: R1.2 billion).
Cancelled/expired unds
R180,5 million (2011: R1.4 billion) o committed but undrawn unds at 1 January
2012 were cancelled and/or expired during 2012 and are thus no longer available or
investment by the und manager.
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KPMG and SAVCA Private Equity Survey 47
ANOTHER AWARD WINNINGINFRASTRUCTURE PROJECTPUT TOGETHER BY A TEAMTHAT IS VERY PASSIONATEABOUT AFRICA!
FinancingAfricas
future
Harith General Partners congratulates
SOCOPRIM for winning the Deal of the Year
Award from the prestigious and authoritative
Project Finance Magazine.
Harith together with Bouygues Construction is proud to form partof a concession to build and operate the EUR 282 million Henri
Konan Bdi Bridge in Abidjan, Cte dIvoire. This award winningPublic Private Partnership will empower the residents of Abijanand stimulate their economy, bringing regional prosperity anddevelopment. Another proud moment in African infrastructure
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Harith is an Authorised Financial Services Provider | Registration no. 31473
Structuring TodayStrengthening Tomorrow
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48 Perormance
Performance
Background
Measuring the perormance o private equity unds on a consistent basis can be dicult
as private equity investments valuations are, by their very nature, highly subjective.
The overriding principle o the International Private Equity and Venture Capital Valuation
Guidelines is to show a air valuation o investments to the investor. These guidelines
were released during 2005 and adopted by the majority o global private equityassociations, including SAVCA and EVCA.
Riscura Fundamentals, in conjunction with SAVCA, produce a quarterly South Arican
Private Equity report. The reported returns over dierent time periods the returns as
compared to listed entities are as ollows:
Investments at latest valuation
The disclosed 2012 valuation o unrealised investments was R107.6 billion, with a
related cost o R99.9 billion.
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KPMG and SAVCA Private Equity Survey 49
15 SAVCA and RisCUra South AricanPrivate Equity Perormance Report Quarter ended 31 December 2012
Figure 38: Returns over dierent time periods (ZAR) 15
Times Money
Time period Pooled IRR Realised Unrealised Total
10 Year 20,6% 0,96 0,71 1,66
5 Year 11,4% 0,62 0.80 1,42
3 Year 17,6% 0,59 0.80 1,39
Figure 39: Listed equity comparison (ZAR) 15
CAGR
Time period Pooled IRR ALSI TRI* FINDI TRI* SWIX TRI*
10 Year 20,6% 18,0% 21,7% 20,2%
5 Year 11,4% 8,8% 14,7% 10,7%
3 Year 17,6% 14,9% 24,1% 17,8%
* Listed index returns are beore ees
** SWIX only ormed in 2002
TRI Total return to investors
Figure 40: Unrealised investments at year end cost compared to valuation (Rbn)
At 31 Dec
2012
At 31 Dec
2011
At 31 Dec
2010
At 31 Dec
2009
At 31 Dec
2008
At 31 Dec
2007
At 31 Dec
2006
At 31 Dec
2005
25.1
17.0
39.3
25.1
58.5
36.4
72.7
56.5
73.0
75.7
89.6
78.3
84.483.9
Cost
Latest valuation
99.9
107.6
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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50 Private equity investment proessionals
Private equity investmentprofessionals
The total number o investment proessionals employed in the Private Equity industry
decreased rom 574 in 2011 to 500 in 2012. Private Equity unds in general did not
replace their natural attrition leavers during 2012.
The gure below illustrates that white males still make up just under hal o all private
equity investment proessionals (2012: 45.8%; 2011: 49.3%). The second largest
category is black males which contributes 14.6% o the total reported numbers at 31
December 2012 (2011: 13.1%).
Indian, coloured and black proessionals employed by the private equity industry
decreased by 3 during 2012 to 180 (representing a decrease o 1.6%). By comparison,
white proessionals decreased by 49 during 2012 to 273 (representing a decrease o
15.2%).The proportion o these proessionals to the total number o proessionals
increased rom 31.9% at 31 December 2011 to 36.0% at 31 December 2012.
At 31 December 2012 16.7% o all proessionals were emales (2011: 17.9%)
Number o proessionals 2012
White Indian Coloured Black Not specied Total
Male 229 48 14 73 40 404
Female 44 13 4 28 7 96
Total 273 61 18 101 47 500
% Breakdown (% o total)
Male 45.8% 9.6% 2.8% 14.6% 8.0% 80.8%
Female 8.8% 2.6% 0.8% 5.6% 1.4% 19.2%
Number o proessionals 2011
White Indian Coloured Black Not specied Total
Male 283 49 15 75 49 471
Female 39 9 4 31 20 103Total 322 58 19 106 69 574
% Breakdown (% o total)
Male 49.3% 8.5% 2.6% 13.1% 8.5% 82.1%
Female 6.8% 1.6% 0.7% 5.4% 3.5% 17.9%
2013 KPMG Services Proprietary Limited, a South Arican company and a member rm o the KPMG network o independent member rms aliated with KPMGInternational Cooperative (KPMG International), a Swiss entity. All rights reserved. Printed in South Arica. MC10034
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KPMG and SAVCA Private Equity Survey 51
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 Coope