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20 JUL 2016

Ethos Private Equity (EPE) was intending to list Ethos Capital on the JSE next month with an intention to raise as much as R2 billion in a stock placement, it said yesterday.

The move will allow shareholders to invest in a portfolio run by sub-Saharan Africa’s largest private equity firm in an initial public offering (IPO).

“The listing will provide the market with a unique opportunity to invest in a diverse pool of unlisted small- to medium-sized companies in funds managed by the EPE, the largest private equity player in sub-Saharan Africa,” Ethos Capital chief executive Peter Hayward-Butt said.

Ethos Capital is expected to list in August and Hayward-Butt said interest from the public was encouraging as the company had already received commitments worth R1.08bn from potential investors.

The listing follows five years of extensive investment by EPE into its franchise, evolving its strategy from a single product, pure-play private equity model to a diversified alternative asset manager.
“Our clients are increasingly looking at private equity houses to offer a broader range of investment opportunities,” said Stuart MacKenzie, the chief executive of EPE.

A report by RisCura and the SA Venture Capital Association (Savca) shows that private equity in South Africa has generally outperformed the total comparative return of investment of the JSE’s all share and SWIX indices, returning an internal rate of return of 18.5 percent. Over the same period, EPE returned 20.9 percent on realised investments.

Questioned on how this growth was sustainable when the economy in emerging markets had not been doing well, Hayward-Butt said sometimes the best time to invest capital in a business was when the economy was under strain due to a slowdown.

South Africa’s economic growth forecasted by the International Monetary Fund is expected to be around 0.5 percent this year. “It is important that we must not stop deploying capital when the financial markets are facing a gloomy picture. It is important that business grow their business even in this period,” Hayward-Butt said.