With the government having identified the automotive sector as a key sector for economic development, private equity firm Agile Capital is actively seeking to invest more in the South African automotive sector.
“We anticipate growth in the industry through parts localization and expect demand for new vehicles to increase as the global economy recovers,” said the director of Agile Capital. Liz Kolobe.
The most notable driver for the local auto sector is, as the popular phrase goes, “localization and transformation”.
“The increased level of manufacturing in South Africa will have knock-on effects on adjacent industries, which can only benefit the economy,” she adds.
Agile Capital aims to invest in companies that provide products and services to original equipment manufacturers or tier one, two or three associate suppliers, as it expects localization goals to create opportunities for growth for these companies – either by increasing their product lines or their products. volumes.
Kolobe says the company is well positioned to partner with such business owners and entrepreneurs to grow their businesses for the long term and actively seeks such opportunities.
Its current investment in a local manufacturer of automotive adhesives and previous investments in reputable automotive aftermarket suppliers have provided Agile with industry knowledge, which it will use to further invest in the industry.
“The main benefit of localization is the positive impact it will have on South African manufacturing companies, which will create jobs,” Kolobe points out.
She says localization should translate into better returns for investors if they back “good companies”.
Additionally, there will likely be investments in infrastructure to enable the efficient movement of these goods, which, in turn, will benefit other industries.
Kolobe suggests that the auto industry is likely to see an influx of knowledge and skills into the country, and potentially new technologies, increasing its competitiveness in the global market.
In addition, localization can also increase the resilience of South African supply chains by reducing reliance on foreign suppliers, making them less vulnerable to international supply chain challenges.
However, these benefits depend on creating an environment that encourages these investments and the circulation of skills, as well as stabilizing aspects such as electricity supply and labor relations.
“Transformation is a South African imperative, and Agile Capital believes that meaningful transformation, outside of ownership, will help grow smaller businesses within the supply chain, giving them the opportunity to participate in significantly,” says Kolobe.
As a long-term investor, Agile Capital aims to invest in companies with strong track records, tangible growth prospects and strong management teams, and to partner with management teams to build sustainable businesses. who achieve their growth aspirations.
“The growth of the companies in which we invest will have a positive impact on the sector and the South African economy,” she concludes.