In recent weeks, South Africans have seen growing evidence of the devastating impact of the protracted lockdown on the economy. There is now a body of evidence suggesting that the contraction in Gross Domestic Product could be as severe as 10%, and the country looks set to experience the worst recession in living memory. If productive capacity is not preserved, South Africa could experience an L-shaped recession, whereby it takes a decade for the economy to return to its 2019 size.
This has prompted South Africa’s largest investment manager, the JSE- and LSE-listed Ninety One to launch an impact investment initiative – the Ninety One SA Recovery Fund, in association with Ethos Private Equity. The fund’s objective is to support the country’s productive capacity and economic recovery from the effects of the COVID-19 pandemic, while seeking an attractive return for investors.
The fund aims to achieve a positive impact with attractive returns via a clear set of investment outcomes. Priorities for the fund are to protect SA productive capacity during the next 24 months, preserve jobs and protect permanent loss of equity value. The fund will consist of a concentrated portfolio with an appropriate mix of senior and subordinated debt, preferred equity, listed equity and private equity with a deployment time horizon of 18 to 36 months.
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