Back in the autumn last year, South Africa’s private equity houses were pretty sanguine about the market there. Having experienced a year like no other in 2007, which saw a 270% increase in investments by value over the previous year, with a large element of that accounted for by one single deal (the R27bn Edcon acquisition by Bain Capital), they were not too concerned by the fact that the market had returned to something like more normal levels. And indeed, the figures for 2008 show only a slight fall in transaction values, from R26.1bn in 2007 (of which R8.7bn was the equity value of the Edcon deal) to R21.3bn in 2008: strip out Edcon and there was actually an increase.

There were reasons to be cheerful: local banks were still lending and there was talk of a mini-boom surrounding the construction and infrastructure activity in preparation for South Africa holding the football World Cup in 2010. The economy wasn’t in that bad shape either: it was still growing, with the major concern being high inflation. There might not have been the mega-deals of the previous year getting done, but there was reasonable activity.

It’s very different now. “The picture in South Africa is not currently encouraging,” says Warren Watkins, of KPMG in South Africa...

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