Globally, M&A volumes and values have seen a downturn, marked by rising interest rates, geopolitical instability and economic uncertainty.
A curious phenomenon has emerged: private equity (PE) dealmakers, particularly in markets like SA, have not only continued to transact but have often done so at robust valuations.
This resilience in the face of a broader slowdown points to unique dynamics at play, offering a compelling counter-narrative to the prevailing M&A malaise.
While corporate buyers, facing tightened credit conditions and cautious growth outlooks, have largely pulled back, leading to a “wait and see” approach, private equity, armed with substantial dry powder and a distinct investment thesis, has remained an active force.
SA has demonstrated a notable divergence from global M&A trends, especially within the private equity sphere.
While overall M&A activity in Africa saw a decrease in deal volume in 2024, deal value significantly increased, with SA targets accounting for over 60% of deal value and more than 30% of deal volume on the continent. This suggests that while there might be fewer deals, the ones that are closing are often larger and command substantial prices.
The resilience of the SA private equity market is underpinned by several key factors that distinguish it from other investment landscapes. A significant contributor is the abundance of “dry powder”, with both local and Africa-focused private equity funds holding substantial capital ready for deployment. This creates a powerful incentive to invest, even when other market participants might be more cautious.
The resilience of the SA private equity market is underpinned by several key factors that distinguish it from other investment landscapes.
For instance, the educational sector recently saw Sanlam Private Equity (SPE) acquire a stake in Boston City Campus, signalling ongoing investment in learning institutions. In the field of digital infrastructure, Mergence Investment Managers secured a controlling interest in strategic assets within Waterfall City, Gauteng, a deal reported in April 2025.
The telecommunications sector also witnessed a major transaction in March 2024, with an Actis-led consortium completing the acquisition of Swiftnet, Telkom’s extensive telecom tower portfolio, for about R6.75bn.
Beyond large-scale infrastructure, support for growing businesses remains strong. Edge Growth backed Trade Shield in March 2024, a business focused on managing trade credit risk. In healthcare, Summit Africa acquired a 55% shareholding in St Mary’s Hospital in Mthatha, also in March 2024, highlighting private equity’s role in the health services sector.
Logistics also attracted attention, with Clearwater Capital purchasing Etlin International’s temperature-controlled storage and logistics arm in February 2024. The packaging industry saw a notable partnership as Nedbank Private Equity and the Mineworkers Investment Company teamed up to acquire a majority stake in Tropic Plastic and Packaging Industry.
Further cementing PE’s diverse reach, Old Mutual Private Equity and Sphere Investments are set to acquire 100% of Much Asphalt, a major asphalt manufacturer, for R 1.1bn. In the medical technology space, E Squared Investments, alongside Anza Capital, invested in Impulse Biomedical, a Cape Town-based medtech start-up.
Summit Africa launched its second private equity fund with an about R3.55bn anchor commitment from British International Investment. This fund aims to target small-to-mid market companies across SA and the broader Southern African region, with a strategic emphasis on financial and digital inclusion, job creation, diversity and food security.
These recent deals collectively underscore the dynamic and diverse nature of private equity investment in SA, covering a wide array of sectors and firm sizes.
The SA private equity market often adopts a strategic, rather than purely opportunistic, investing approach. It involves taking a longer-term view, focusing on value creation through operational improvements, strategic bolt-on acquisitions and active management, rather than simply timing the market.
This allows firms to justify paying “full prices” if they identify a clear path to enhancing an asset's value over their holding period. Moreover, there’s less reliance on expensive debt for acquisitions.
Though debt is certainly a component, the relatively underdeveloped local debt markets for private equity transactions mean equity plays a more prominent role, potentially contributing to more robust valuations as firms are less constrained by rising borrowing costs.
While specific deal values are often confidential, anecdotal evidence and market reports highlight the ongoing activity and premium valuations for quality assets.
The trend of private equity defying the broader M&A slowdown, particularly in SA, is likely to continue. While global economic uncertainties persist, the fundamental drivers of private equity investment — the availability of capital, the focus on value creation and the identification of high-quality, growth-orientated assets — remain strong.
For SA, the enduring resilience of the government of national unity has sparked a degree of optimism among local and international investors, potentially further encouraging deal activity.
While challenges remain, the ability of private equity to identify, acquire and drive value in compelling SA businesses at robust prices demonstrates the sector’s adaptability and its belief in long-term growth opportunities.
• Bahlmann is CEO: corporate & advisory at Deal Leaders International
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