The realisation market in the South African private equity industry has returned the highest amount of capital since 2011, according to the 2015 KPMG and SAVCA Venture Capital and Private Equity Industry Performance Survey.

Funds returned to investors increased by R4.4bn (44.7%) from R9.8bn during 2013, to R14.2bn during 2014.

Erika van der Merwe, CEO of Southern African Venture Capital and Private Equity Association (SAVCA), said the big story of private equity activity in 2014 was the number and value of exits.

“Some of the high-profile exits included Alexander Forbes, Rhodes Foods, Tiger Wheel & Tyre and Libstar Holdings,” she said.

The realisation in 2014 had implied times money multiplies of 2.4 times, significantly higher than the 1.6 times reported in 2013 and the 1.2 times in 2012.

The value of disposals increased from R4.8bn in 2013 to R9.3bn during 2014.

Disposals through sale of listed shares was the most popular in value terms.

The average proceeds per disposal increased from R45.6m in 2013 to R103.6m in 2014.

Van der Merwe expects the trend to continue in 2015: “The exit activity is driven by the private equity life cycle – the mature stage of many of the funds – as well as by attractive market pricing. We also expect to see further transactions taking place, as funds raised in 2012 and 2013 continue to be deployed.”

According to latest KPMG-SAVCA figures, last year, the local private equity industry experienced a slight increase in total funds under management, which grew to R171.1bn (up from R169.3 bn in 2013).

The growth in funds under management in the South African market reflects the growing interest in investing in private equity locally.

A significant portion of these funds, amounting to R54.9bn, are in the form of undrawn commitments.

Warren Watkins, Head of Private Equity at KPMG, said: “These funds are yet to be deployed and the private equity fund managers remain active in seeking suitable transactions.”

The majority of private equity funds are generalist in nature, and invest across a range of sectors.

However, the analysis of sectors in which funds invested in 2014 suggests that infrastructure investing remained significant.

Of the investments made during 2014 classified into sectors, 25.5% were in the infrastructure sector, 24.7% in the other/unspecified sector category and 18.2% in the banks, financial services and insurance sector.

“When asked the question about which sectors are hot, members indicate that it is about finding the right business with the right prospects – rather than them emphasising a particular sector,” said Van der Merwe.

Total funds raised in 2014 amounted to R6.8bn, 43% of which was raised outside of South Africa.

“We are pleased to note that private equity remains a significant source of foreign direct investment for South Africa. Of the R6.8bn in funds raised during 2014, 43% was raised from outside South Africa. Also, of cumulative funds raised and not yet returned to investors (by end 2014), 48% were from outside South Africa,” said Van der Merwe.

The KPMG-SAVCA Private Equity Industry Survey represents over 90% of total South African private equity funds by value.