Private Capital Allocators: Tracing the Arc of Influence in South Africa’s Economic Evolution and Standard Bank’s Involvement
In the current times that we live in, one hardly ever gets an opportunity to sit back and ask questions about how things have come to be. We often take for granted that this is how it has been, which at times can be misguided and result in a below-average appreciation of its historical impact. Globally, Private Capital is one such phenomenon. The phrase is often used interchangeably, causing confusion.
Let’s pull back the curtain on a key force quietly shaping economies the world over—private capital allocators. You might not always see them in the spotlight, but their impact is felt everywhere: asset managers, family offices, venture capitalists, private equity firms, permanent capital vehicles, investment holding companies, and big institutional investors. They decide how, where, and why money moves. When you examine how this power has evolved in South Africa, you gain a fascinating insight into the interconnection of capital, influence, and change.
Origins: Early Private Wealth
South Africa’s story as a place of private capital allocation is almost as old as the country itself, dating back to the days of Dutch and British settlers. The Dutch East India Company established a presence in the Cape in the 17th century, primarily to replenish its trading ships en route stocked between Europe and Asia. Not long after, things started ramping up: diamonds were discovered in 1867, and gold in 1886. In both those instances, Standard Bank was the first bank to open a branch on the diamond and gold fields. Suddenly, the world took notice, and foreign capital came rushing in.
It did not take long for capital allocation to get formalised, especially with the founding of the Johannesburg Stock Exchange in 1887. At this point, much of the capital was in the hands of a small, connected group—think mining houses like De Beers and Anglo American. This concentration would echo for generations.
Twentieth Century: Institutionalisation
As time marched on, South Africa’s private capital scene began to look more organised, with banks, insurance companies, and pension funds emerging as major players. Large conglomerates—names like Anglo American and Rembrandt—tightened their grip, keeping capital allocation primarily concentrated with investments mainly targeted at mining, finance, and manufacturing, which only deepened economic divides.
Even during this era, change was brewing. The Public Investment Corporation (PIC) was established in 1911, bringing the state into the asset management game, particularly in government and public service pensions. The big problem, however? Access to private capital was tightly restricted. Black entrepreneurs and communities were systematically locked out, missing out on opportunities to build and grow.
The Private Equity Revolution
Then came 1994, and with it, a new dawn, and a sea change. Democracy and the lifting of international sanctions sent new waves of investment crashing onto South Africa’s shores. The Government’s Black Economic Empowerment (BEE) policies were designed to redress historical inequalities by expanding capital ownership to a broader population, particularly targeting the previously disadvantaged groups.
This period also saw the birth of private equity in South Africa. Companies such as Brait and Ethos entered the market, facilitating management buyouts and injecting growth capital into mid-sized businesses. These dealmakers brought in global best practices and helped modernise companies. This emergence was driven by political uncertainty in a democratic South Africa and fuelled by an economy growing at an average of 3,2% between 1994 and 2010, vs 0,8% for the next 15 years.
What’s even more exciting? The emergence of Black-owned investment companies—Safika Holdings, Kagiso Trust Investments, Thebe Investment Corporation, Wiphold, and others—helped flip the script. Once again, Standard Bank is playing a critical role as a strategic equity partner to some of the preeminent Empowered Sponsors in South Africa. These groups, often working through BEE deals, started investing in sectors that had been long neglected: healthcare, education, retail, and infrastructure, thereby creating a new narrative around who controls and benefits from capital.
Impact Investors and the Rise of Alternatives
The 2000s ushered in a fresh wave of innovation. Now, it wasn’t just about private equity—venture capital, infrastructure funds, and mezzanine finance entered the scene, giving allocators more ways to back growth and create impact. South Africa quickly became Africa’s private equity powerhouse, thanks to its strong legal framework, savvy financial sector, and wealth of entrepreneurial talent.
Suddenly, “impact” was the buzzword. Allocators like Old Mutual Investment Group have been focusing on SMEs, renewable energy, affordable housing, and agriculture, to combine financial returns with positive social outcomes. New family offices, often established after 1994 wealth, were exceptionally nimble—backing bold ideas, talented entrepreneurs, and high-growth ventures all over the country.
Challenges: Concentration, Regulation, and Socio-Economic Divides
Still, significant challenges remain. South Africa’s capital allocation is highly concentrated between banks, some prominent asset managers, and a few pension funds. Add in a web of regulatory complexity, enduring economic inequality, and you’ve got an environment where capital doesn’t always flow where it’s most needed.
There’s also tension between short-term financial returns and long-term nation-building. South Africa faces enormous hurdles: including high unemployment, energy challenges, and an urgent need for inclusive growth. Increasingly, private capital allocators are being asked to step up as partners in social change, not just as financial overseers. Public-Private Partnerships have been touted as the elixir to solving some of these challenges. We are starting to see some signs of this partnership taking shape across several sectors, following the success of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). Private capital allocators are organising themselves and continue to be strategic partners in navigating these interesting times.
Technology and the Democratisation of Capital
Enter the digital age. Technology is revolutionising the way capital reaches new ideas and entrepreneurs. Fintech platforms, crowdfunding, and alternative credit models are making it easier for those who were previously excluded, to get access the capital they need. Venture capital funds like Knife Capital, 4Di Capital, Norrsken22 and Ventures Platform, are investing in fintech pioneers and startups, fuelling innovation, and creating jobs.
At the same time, environmental, social, and governance (ESG) considerations are front and centre. Private capital allocators are under more pressure than ever to show that their investments are good for society and the planet—especially relevant in South Africa, which is particularly sensitive to socio-economic and environmental risks.
The Road Ahead: Allocation as Agency
Looking to the future, the role of private capital allocators in South Africa is more important than ever. They’re being challenged to look beyond profits, to aim for catalytic impact, champion diversity, and open new doors for inclusion. With the Government also under pressure to deliver infrastructure, this presents a unique opportunity to mobilise large pools of private capital to address these issues.
The real shift? Seeing capital not just as money, but as a form of agency. The best allocators aren’t just gatekeepers; they’re architects of possibility, connecting global capital with local potential, and helping to build resilience by taking smart risks.
Lessons for a Global Audience
What can we learn from South Africa’s journey? At its core, it’s a story of caution and hope. When finance is concentrated, exclusion becomes entrenched. But visionary allocators can use capital to drive transformation and positive change. The global lesson is clear: capital should be stewarded responsibly, invested with purpose, and seen as a tool for building a better, more inclusive future for all. This aligns squarely with our focus at Standard Bank, which is to redefine the future of private capital, by leading with insights, forging powerful partnerships, and delivering proprietary access to opportunities that create lasting impact.
Prepared by:
Tsoanelo Ntene, Standard Bank CIB’s Head: Sponsor Coverage in South Africa