Entrepreneurs are the lifeblood of the economy, not only because they provide the building blocks for economic growth, but also improve prospects for employment. Private equity, through its fund format, channels finance and intellectual capital to entrepreneurs, helping to make a material and positive contribution to the economy.
In 2009 and 2013 the South African Venture Capital & Private Equity Association (SAVCA) published a report on The Economic Impact of Venture Capital and Private Equity in South Africa, funded by the Development Bank of Southern Africa (DBSA).
The research covered a number of private equity portfolio companies and showed that private-equity backed companies out-employed, out-performed, and out-invested comparable universes of private and listed peers. Private equity as an investment class also materially assisted in raising the level of empowerment ratings and compliance in portfolio companies.
Greater transparency of industry returns may further assist in dispelling misperceptions about private equity's contribution to the long term investing community. Metier actively participates in industry performance benchmarking under the auspices of SAVCA and which is undertaken by Riscura.
In addition, we argue that investors do better with top quartile managers raising repeat funds. In its Performance Monitor, Preqin suggests that over two thirds of top quartile managers outperform the median with their successor funds. We also point to mid-cap growth capital funds that outperform and are less volatile than the universe of buyout funds globally. Our ambition at Metier is to apply these benefits beyond the borders of South Africa into the rest of the continent. As our Africa coverage grows more extensively and investor confidence grows in the wider region, pan-African investment will play a significant role in our strategic thinking and deal flow.
The best evidence of our contribution is the difference we make through our portfolio companies, as they grow, build value and compete as market leaders.