As traditional markets face volatility and limited yield, savvy investors are turning to private capital, particularly private credit, as a path to resilience and higher returns. With South Africa’s regulatory landscape evolving and alternative investments gaining traction, understanding this shift has never been more critical.
In the June 2025 edition of FA News, Grovest’s own Tivon Loubser was invited to contribute insights on this very topic. His article explores the surge in private equity and credit investing in South Africa, the role of regulation in shaping access, and how this asset class is fast becoming a powerful tool for long-term wealth creation.
We’re proud to re-share Tivon’s thought-provoking piece below:
“Private equity and credit: the future of wealth-building in SA
For years, retail investors have looked to the stock market as their main path to building wealth. These markets have had decades to mature, backed by strong regulatory frameworks and clear investor protections.
By comparison, private capital in South Africa has mostly remained in institutional hands and is still relatively unfamiliar to everyday investors. But this is starting to change.
Globally, private capital is growing rapidly and becoming more accessible to retail investors seeking to diversify beyond listed shares. This shift is being led by some of the world’s largest asset managers, including BlackRock, Blackstone, Carlyle and Vanguard, who are expanding their private market exposure and bringing scale and visibility to the asset class.
Private equity and credit in SA
South Africa is following suit. The local alternative investment space, especially private equity and private credit, is gaining traction. In 2022, South African private equity raised R19.6 billion in new capital, up 21% from the previous year, even as global fundraising slowed. Much of this is flowing into infrastructure, energy and property, reflecting growing investor interest and a maturing market.
However, with growth comes complexity. The compliance landscape remains fragmented, and regulatory scrutiny is rising. Private credit funds wanting to raise retail capital must understand new rules, manage disclosure obligations and maintain transparency.
Unlike traditional unit trusts, private equity and credit funds have operated in a relatively grey area. Most are structured as limited or en commandite partnerships and have not been subject to the same regulations as collective investment schemes. While managers are licensed under the Financial Advisory and Intermediary Services (FAIS) Act and monitored by the Financial Sector Conduct Authority (FSCA), the funds themselves have not faced direct oversight.
Licensing, disclosure, and oversight
This is set to change with the upcoming Conduct of Financial Institutions (CoFI) Bill, which aims to create a single, harmonised framework for financial services. It will introduce licensing for private fund managers and bring funds into a clearer regulatory scope. Navigating these changes while managing investor expectations will be a major challenge for the sector.
Transparency is another key area. Private funds report less frequently than public ones and often involve complex, illiquid assets. Under CoFI, managers will need to adopt clearer valuation policies and improve reporting. Risk disclosures must cover leverage, exit limitations and liquidity constraints. Helping investors understand the long lock-in periods will be essential for compliance and trust.
Beyond regulation, performance during market volatility is also important. Private equity and private credit have proven resilient in past crises and offer strong diversification.
Over the past two decades, private equity has often outperformed listed equities in times of stress. During the COVID-19 shock, global private equity funds returned about 18%, compared to 2% for public markets. With locked-in capital, managers can avoid panic selling and support portfolio companies, contributing to lower volatility.
Private credit also performed well. In 2020, default rates on private credit loans stayed below 2%, about half the broader leveraged loan market. With senior secured positions and close borrower relationships, private credit funds protected capital while continuing to generate income. These features make it a reliable diversifier with low correlation to listed assets.
The long-term value
They also offer access to sectors not well represented on the JSE. Recent Regulation 28 changes allow pension funds to allocate more to alternatives.
These investments do carry risks – they are less liquid, pricing is infrequent, and early exits are difficult. However, when used within allocation limits, private alternatives can offer both resilience and returns.
South Africa’s private markets are entering a new phase. With regulation evolving and track records growing, advisers and brokers are well-positioned to guide clients through this space. Understanding the rules and how these investments behave during downturns will be key to unlocking their value.
As highlighted in the article, South Africa’s private markets are entering an exciting new chapter—one that demands insight, structure, and vision.”
At Grovest, we’re proud to be at the forefront of this evolution. That’s why we’re preparing to launch our own private credit fund, built to give investors access to this dynamic and fast-growing space. With a focus on capital preservation, yield, and diversification, our fund will provide a new avenue for forward-thinking investors looking to unlock long-term value.
Read the full FA News article here and contact Tivon to find out more about our private credit fund at tivon@grovest.co.za