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Q1 2023 - (released May 2023)

SA's quarterly Private Equity & Venture Capital magazine


Ethos goes dancing with the Barbarians

by Michael Avery

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“The best business leaders are those who can adapt, innovate, and thrive in the face of change. Embrace disruption, and turn it into an opportunity.”  Barbarians at the Gate

Ethos Private Equity Group made headlines in the fourth quarter of 2022 with its acquisition by The Rohatyn Group (TRG), a global private equity firm of distinguished pedigree. This acquisition, which became unconditional on 1 April 2023, has been described as transformational for Ethos and its future. 

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In an interview with Catalyst magazine, CEO of Ethos Capital, Peter Hayward-Butt shared insights into this deal and what it means for the company’s future, as well as his outlook for private equity in the region.


The Rohatyn Group, founded by Nicolas Rohatyn, is a New York-based business that has been around for over 20 years. Rohatyn’s father, Felix Rohatyn was the architect of the famous leveraged buyout (LBO) of RJR Nabisco in the 1980s, as chronicled in Bryan Burrough and John Helyar’s book, Barbarians at the Gate. The Rohatyn Group has a strong presence in emerging markets, particularly in Latin America, India, and emerging Europe, which aligns with Ethos Capital’s focus on investing in emerging markets.

Barbarians at the Gate provided readers with a front-row seat to the cutthroat world of Wall Street and corporate finance. It introduced the world to private equity in all its leveraged, greed-fuelled and ruthless glory, and can be classified as a seminal moment for the asset class. Much has changed since, not least of which is the extent to which financial engineering has been toned down and replaced with a much greater focus on adding real business value.

In the book, TRG is depicted as a strategic advisor to the management of RJR Nabisco, providing financial and tactical support in the face of the hostile takeover attempt by Kohlberg Kravis Roberts & Co. (KKR) and other parties. TRG’s involvement in the deal includes providing financial advice, helping to structure defensive strategies, and assisting in negotiations with various parties involved in the takeover attempt.

Hayward-Butt highlighted the significance of partnering with TRG, stating, “I think the merits of the deal for us are partnering with someone who is interested in emerging markets. They’re very, very strong in Latin America, in India, and emerging Europe. They really do understand emerging markets, which I think was a differentiator for us in looking for a partner.”

But it goes beyond just reading from the same emerging markets page. The access to capital in New York that The Rohatyn Group brings to Ethos is seen as a major advantage. “At the end of the day, Nick and his team are extremely well plugged into the capital allocators there,” said Hayward-Butt. “And I think, to be honest, what we've seen globally is the KKRs, Carlyles, et cetera of this world getting their disproportionate share of capital; the bigger firms getting bigger and the regional firms losing out. So, I think for us to be part of a merged entity and to be part of a much bigger organisation based out of New York really is transformational for us.”

The cultural fit between Ethos Capital and The Rohatyn Group is also seen as a strong point of the acquisition. Hayward-Butt emphasised the importance of cultural alignment in any deal, stating, “When you’re putting a deal together, the first and most important thing is, is there a cultural fit? And I think it takes a couple of those sorts of conversations, asking, ‘are we aligned around where emerging markets can go from a private investing perspective?’ That’s the one thing we looked at.”

He further added, “not once in those discussions was there anything concerning, not a heated debate or any misalignment around where we wanted to take the business, which I think is good.”


Hayward-Butt is quick to recognise that, clearly it's a honeymoon period, but he’s confident in the cultures merging seamlessly. 


With the merger of Ethos and The Rohatyn Group, Ethos aims to play in the big leagues when it comes to global emerging market investors. The deal provides Ethos with the scale and access to capital needed to compete with larger private equity firms and expand its presence in emerging markets.


As a founding father of the local private equity industry in South Africa, Ethos has a strong track record of investing in and partnering with companies in emerging markets. The merger with The Rohatyn Group and its access to capital in New York is expected to further strengthen Ethos’ position in these markets and open up new opportunities for growth.


Africa presents diverse investment opportunities in private markets, real assets, and public markets, where local expertise and experience are crucial for successful outcomes. By combining forces with Ethos, TRG is well-positioned to deliver a wider array of investment solutions to LPs (limited partners) of both firms. With over 20 years of experience, Ethos has made over 150 investments supporting South African and sub-Saharan businesses since 1984. TRG’s investment teams offer capabilities across public equities, corporate and sovereign debt, private markets, forestry, agriculture and infrastructure.

Nicolas Rohatyn, The Rohatyn Group’s Chief Executive Officer and founder, highlighted the philosophical and cultural similarities between TRG and Ethos, stating, “We share a belief that multiple thematic cross currents – such as private credit, renewable energy, digitalisation, and agriculture, among others – will anchor future investment priorities for investors. Our combined firm, with almost US$8bn in AUM (assets under management), almost 400 institutional LPs, and the ability to offer solutions for de novo investing, as well as ongoing GP consolidations and fund restructurings, will occupy a unique position in our industry.”

Ethos Private Equity CEO, Stuart MacKenzie expressed excitement about the acquisition, stating at the time of the announcement that “It is the start of an exciting new chapter for Ethos and the culmination of the strategic transformation we started in 2016. This transaction represents a compelling opportunity for us to pursue the next growth phase as the African arm of TRG, one of the largest alternative asset management firms in emerging markets.”

MacKenzie also emphasized the alignment of values and cultures between TRG and Ethos, with a shared passion for innovation, driving impact, creating value, and delivering returns.

One of the immediate benefits of the acquisition for Ethos Capital’s portfolio companies is the access to new markets and partners. Hayward-Butt mentions that one of their largest portfolio companies, Optasia, has already been introduced to a partner in Latin America through TRG’s network. He sees this as a fantastic opportunity that would have been unlikely without TRG’s involvement. He also highlights the potential for merging businesses with a "South African flavour" in South America, leveraging TRG’s strong presence in the region. This illustrates how TRG’s acquisition of Ethos Capital has opened up new doors for portfolio companies to expand their reach and tap into previously untapped markets.

Hayward-Butt also sees opportunities for secondaries in the current market where rising interest rates and depressed growth have heightened distress in portfolios. He explains that with volatility in the markets, some investors may need liquidity and would be willing to sell their holdings at a discount to the underlying net asset value (NAV). This presents an opportunity for Ethos Capital to acquire these holdings at a discount and potentially generate favourable returns for investors. 

Outlook for private equity in South Africa
When pushed for his view on South African private equity opportunities, Hayward-Butt is quick to acknowledge that the mood is ultra-pessimistic, but hastens to add that the grass is not always greener in other emerging markets. 

“We’ve seen, in the last year, much more international interest in our companies than we ever have before,” says Hayward-Butt. “And I think it’s a function of two things. One, developed markets are under more pressure than they were, with the cost of funding going up. Secondly, from a global perspective, yes, we have our challenges. But it is here that there remains growth; the demographics remain good, and I still think South Africa is a beachhead into Africa, which is a continent that’s difficult to conquer. So, I believe we’ve got a lot of things going for us. Do we need more policy certainty? For sure. Do we need to sort out loadshedding? For sure. But we’re not the only country with these issues. And as I mentioned, there is more international interest – it’s also partly because, I think, our companies are undervalued relative to the rest of the world.”

“And then you need the ability to borrow money to leverage up the returns and then exit these businesses over time. And I would say, on most of those fronts, things are more positive than they are negative [in South Africa].” 

And the last perspective that Hayward-Butt points to for Ethos is the competitive dynamic. 

“In the UK or US, and even in Europe, if there’s a deal to be done, there’s at least eight or 10 private equity firms all over it. Most of the big private equity firms have left sub-Saharan Africa, which has left a huge gap for companies like Ethos and the local players to play into. So, when you are pitching up to do a deal, I think you can get these deals at relatively decent prices. And at the end of the day, that’s a key component of making good returns. So we remain very, very bullish. We do need better certainty and more growth in the country – that would be a massive tailwind.” 

Hayward-Butt also reveals that they are considering opening up the opportunity for Ethos Capital investors to diversify their exposure geographically by investing not only in Ethos funds, but also in funds in other emerging markets around the world. This move would require shareholder approval, but it demonstrates TRG’s strategic vision to expand Ethos Capital’s investment scope and provide more options for their investors.

One key aspect of Ethos Capital that attracted TRG’s interest is its unique funding structure as a listed entity. Hayward-Butt acknowledges that Ethos Capital is one of the key reasons why TRG was interested in acquiring the company. He explains that setting up such funding vehicles is not easy, and Ethos Capital’s listing provides a differentiating factor for the company. He also mentions that they plan to expand the investment set to include funds in other emerging markets, which would transform Ethos Capital’s exposure from sub-Saharan Africa to that of global emerging markets. This highlights TRG’s intention to leverage Ethos Capital’s listing status to unlock new investment opportunities and broaden the company’s investor base.

Hayward-Butt further elaborates on the importance of per share growth for Ethos. He states that the key issue for them is to ensure that the growth in capital per share sustainably exceeds the cost of equity. He believes that achieving this would help narrow the discount that currently exists between Ethos Capital’s share price and its net asset value, which he considers unacceptably large. 

In typical private equity fashion, the terms of the transaction were not disclosed. To borrow from Barbarians at the Gate: “In business, you're only as good as your last deal. It's a cutthroat world where mistakes can be fatal, and there's no room for complacency.” 

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