SIMON BROWN: I’m chatting now with Kondi Nkosi, country head for Schroders in South Africa. Kondi, I appreciate the early morning time. Private equity – in many senses it’s investing, it is entirely investing. The key point I suppose there is the ‘private’. These private equity firms are buying unlisted companies with the key aim of improving the value, whether by turnaround, perhaps by helping them with growth or something.
SIMON BROWN: That’s a good point. I actually hadn’t thought of that. We have seen a number of companies actually taken off the JSE. I suppose in that case part of the attraction is you think that the market is fundamentally mispricing, because that’s really what a private equity company is doing. They want to buy a company which they think they can get significant better value out of. The easiest way to do that is to start with a company which is ‘cheap’.
SIMON BROWN: Yes, I take the point. And perhaps a little more time as well; you don’t have that biannual in the US, [and] that quarterly spotlight with results. This all then says – and this is always the case with private equity – who the private equity managers are is going to be critically important.
KONDI NKOSI: Yes, absolutely, Simon. I think that last point you make in terms of ‘Ts & Cs apply’ is a critical one. But, to answer the question, there’s certainly been a lot of development in the product structures that are available for investors to access, particularly in the sort of international space. We as Schroders are part of this trend where we are broadening the access of these private-equity investments to the more retail client base.
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