Business Unusual for South African Private Equity

Corporate Finance & Restructuring | Economic Consulting

May 12, 2020


The widespread disruption caused by the Coronavirus pandemic has led to ‘business unusual’ for many companies in South Africa as they respond to new challenges in an unpredictable and rapidly changing operating environment.

Private Equity Investors and portfolio companies must take this new reality into account, not only for their day-to-day operations, but in their strategic plans for the foreseeable future.

The Situation

FTI Consulting surveyed a number of Private Equity Investors who invest in South Africa to understand how this period of ‘business unusual’ has impacted their business, their current portfolios and how they expect investing in a post COVID-19 world to be different.

Whilst the current focus of Private Equity Investors may be to proactively manage and minimise the impact of COVID-19 and the imposed lockdowns on portfolio companies, we believe, from feedback received, that they will, over the coming months not only consider a new approach to portfolio diversification, but also reconsider the way in which they evaluate new investments, including the types and level of due diligence applied, timing of exits, as well as transaction funding and structures, amongst others.

Support of portfolio companies and management teams

All the Private Equity Investors we surveyed are engaging with portfolio companies and management teams far more frequently than they ordinarily would, some even on a daily basis. Investors are supporting their management teams by sharing best practice across their portfolio companies, acting as a sounding board and providing leadership support and direction.

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