4 January 2012
The turbulence of the global economy notwithstanding, 72% of private equity professionals in the BRICS countries believe investment activity in the private equity sector will rise in 2012, according to a survey by consultancy Grant Thornton.
The report, based on interviews with private equity professionals across the world, was released in November.
The BRICS countries – Brazil, Russia, India, China and South Africa – were the most optimistic, with 72% of those surveyed believing investment activity would increase over the coming year, compared to a 61% overall optimism figure.
Not surprisingly given the eurozone credit crisis, respondents in Western Europe were the least optimistic, at 50%.
Within the BRICS group, Brazil was the most optimistic, while expectations in South Africa were slightly more subdued.
David Paropoulos, corporate finance director at Grant Thornton Johannesburg, attributed this sentiment to the more established nature of South Africa’s buyout market, but added that “notable activity” was still expected in the country in 2012.
Paropoulos added that South Africa was seen by many private equity investors as a gateway into the rest of Africa and, as such, strong private companies were being sought with a strategic African expansion plan in mind.
“We expect a sizeable level of activity in the [South African] equity market in the next few years,” he said.
Regarding challenges for private equity, the survey found that BRICS countries viewed regulatory matters as the biggest hurdle facing the market.
The report also revealed a tough environment for fundraising. Globally, there is more negativity than positivity about the outlook (46% versus 28%), with 13% feeling very negative.
“This negativity is particularly acute in developed markets, including Western Europe (47% negative versus 20% positive) and North America (48% negative versus 26% positive),” Grant Thornton said.