This R10bn fund seeks to help restore SA’s economy back to health

With South Africa's economy struggling amidst the COVID-19 pandemic and lockdown measures, The Ninety One SA Recovery Fund in partnership with Ethos Private Equity has unveiled an impact investment initiative targeting R10 billion to help revive the country's economic health. Simon Howie, Co-Head of SA and Africa Fixed Income at Ninety One, recently discussed the fund's mission on CNBC Africa. The fund aims to differentiate itself by focusing on supporting small and medium enterprises (SMEs), large private companies, and medium-sized companies that may not receive as much support from traditional sources like banks. Howie emphasized the importance of providing liquidity support to businesses that were in good health before the pandemic and are essential for ensuring a robust economic recovery. By helping these businesses weather the storm, the fund aims to prevent mass layoffs and closures of vital businesses. Although there is inherent risk in investing in companies during an economic downturn, Howie believes that by selectively investing in businesses with strong fundamentals and potential for growth post-pandemic, the fund can generate decent returns for investors. The fund is primarily targeting companies with operations in South Africa that are struggling due to the economic downturn and may require capital or liquidity support to survive. Should any of the companies face financial difficulties, the fund will work closely with management and shareholders to explore options such as debt-to-equity conversions to keep the business afloat. Howie expressed optimism about the recovery of the economy, noting that while the recovery may be slow, companies are gradually transitioning from limited operations to increased activity. He pointed out that different sectors will recover at varying paces, with industries like hospitality facing extended challenges. The fund aims to raise a total of 10 billion, and while additional fundraising may be considered in the future, the focus is on leveraging the support of their current client base and collaborating with other stakeholders in the industry to maximize impact. Overall, the fund's objective is not only to provide financial assistance but also to serve as a catalyst for broader economic recovery efforts in South Africa.