Private equity is a patient capital. Even in the 2008 financial crisis, it was able to weather severe economic storms. According to joint heads of Private Equity at law firm Cliffe Dekker Hofmeyr (CDH) David Pinnock and John Gillmer, the available evidence suggests that Private Equity Managers reacted quickly and effectively to the current economic crisis. How? By shoring up their portfolio investments with equity capital injections and effectively deploying capital where it will be most efficiently used.

Pinnock says, “A private equity manager is closer to the business (and management) of a portfolio investment than a shareholder in a public company and arguably far better placed to recognise the difficulties that a business faces and to drive solutions.”

With Government severely constrained as to what it can do to provide stimulus to the economy. Gillmer says, “one of the best avenues available would be to allow pension funds to increase their investments in unlisted businesses, but more specifically private equity as an asset class. This would necessitate a fairly simple amendment to the current Regulation 28 to the Pension Funds Act. To this extent National Treasury has proposed amendments to Regulation 28, which delinks private equity from hedge funds into separate asset classes and increases the investment limit for private equity from 10% to 15% (of total assets of the pension fund). The proposed amendments also include increasing the limits by which local pension funds can invest into South African and African infrastructure (55% overall exposure across all asset classes). Should the proposed changes become effective, it will provide pension funds with a higher degree of diversification and greater access to sustainable and impact investing.”

As CDH was intricately involved and was shortlisted for the Catalyst private equity Deal of the Year – an award for which the firm was nominated in respect of two different deals. John Gillmer and David Pinnock are recognised as leading experts on the topic of private equity and are willing to share their thoughts on the following topics:

The history of private equity in South Africa and the impact of COVID-19 has had on private equity?
Why Private Equity is well placed to help grow the economy?
Why pension funds should be allowed to deploy more investments through private equity?

ENDS