Private capital fundraising in Southern Africa surged 162% in 2025, reaching $1.3 billion — the second-highest figure recorded in the past decade. The data comes from the Southern African Venture Capital and Private Equity Association (SAVCA) 2026 Private Capital Industry Survey, reflecting a significant increase in the resources investors made available to finance companies and projects across the region.

The study, based on responses from 51 private capital firms and seven investment entities, all headquartered in South Africa, shows that South African investors accounted for 55% of capital raised. Over the same period, commitments from pension funds and endowments rose 175% to $267 million, pointing to greater participation by these institutional investors in corporate financing.

Beyond new fundraising, the realisation of prior investments generated $261 million in 2025, enabling investors to recover a portion of previously deployed capital. Funds targeting infrastructure, energy, and related sectors accounted for 62% of total capital raised during the year, down from 71% in 2024. Generalist funds — which invest across multiple sectors — increased their share from 22% to 33%, signalling a broadening of investment strategies.

Despite the fundraising increase, the amount actually deployed into new investments fell 16%, declining from $1.4 billion in 2024 to approximately $1.2 billion in 2025. Energy, real estate, and infrastructure together absorbed around 40% of invested capital. Energy’s share rose from 13% to 20% and real estate from 6% to 11%, while infrastructure saw its allocation fall sharply from 27% to 9%.

Education also gained prominence in the investment mix, rising from 2% to approximately 16%, though the survey notes this growth was largely driven by a single fund manager. In terms of capital use, 49% was directed towards business expansion and development, while the proportion allocated to acquisitions climbed from 20% to 38%, reflecting heightened deal activity in company and stake purchases.

Data on portfolio companies show positive employment outcomes. Of the 261 companies analysed, 70% increased headcount between 2023 and 2025, while 30% reduced their workforce. Among job-creating companies, the weighted average compound annual growth rate in employment stood at 16%. On revenues, 56% of the 196 companies assessed recorded compound annual revenue growth above 5%.

Technology gains weight in investment decision-making

Despite positive employment and revenue results, the survey concludes that the private capital market is becoming more selective, with investors concentrating resources on opportunities deemed most promising. This trend is accompanied by greater attention to technological transformation: the proportion of firms identifying this area as their primary investment priority rose from 11% to 40%.

On environmental, social, and governance criteria, data quality remains the principal obstacle to implementation, cited by 44% of surveyed firms. Meanwhile, revenues from the sale of investment stakes rose 19% to reach $1.2 billion in 2025, allowing investors to recover deployed capital and free up resources for future investments.

Among exit routes, trade sales — the disposal of stakes to other companies — increased from 15 to 27 transactions, generating $352 million. The growth in these transactions underscores the importance of exit strategies, through which funds seek to recover invested capital and, where possible, generate returns that can be redeployed into new opportunities.

Looking ahead to 2026, the primary challenge will be converting recovered capital into new investments in an environment of increasing investor selectivity. In South Africa, the energy transition may continue to generate private capital opportunities, particularly through the tender launched by state power utility Eskom for the procurement of six gigawatts of renewable energy.