When the country’s largest and most ambitious private equity (PE) deal goes wrong, it can’t reflect well on the rest of the industry. As much as local PE businesses say that Boston-based Bain Capital, which acquired control of Edcon in 2007, was not "one of us", it was the most visible example of a PE firm in action. Now, PE investors are rightly concerned that other companies owned by their funds are on the brink of implosion. PE is a growing industry, with R205bn under management — about three times as much as SA’s hedge fund fraternity manages. If there is an impending crisis at PE’s epicentre in Fricker Road, in the Johannesburg suburb of Illovo, it is well concealed. But the ripples could go a long way. In the past, PE in emerging markets was dominated by development finance institutions such as the International Finance Corp. Now 56% comes from pension funds, so individual retirement savings are on the line. At least over 10 years the 18.1%/year internal rate of return has bee...
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