Upcoming SAVCA, Industry and News events:
The South African Venture Capital and Private Equity Association (SAVCA) is pleased to note the proposal to introduce new rules for the deduction of interest incurred on acquisition finance. These new rules will replace the current approvals process whereby SARS determines the amount of deductible interest on a case-by-case basis. The change announced in the National Budget, as presented by Finance Minister Pravin Gordhan, will therefore provide much more certainty for investors and debt providers – including those working in the private equity industry. The proposal mentions interest on excessive debt being rolled over for up to five years. It does not however indicate what will be regarded as excessive debt. SAVCA will continue to engage with National Treasury in this regard and is hopeful that the excessive debt threshold will be reasonable and in accordance with current lending trends.
The disruption of credit markets following the emergence of the 2008 global economic crisis has sparked interest from international markets in “distressed” investments. Since 2007, distressed private equity funds in Europe have consistently been raising around US$100 billion per annum. The figure for US investments is believed to exceed this. However, as opportunities diminished and the return on investments declined, investors started shifting their focus to emerging markets such as South Africa.