A message to shareholders of South Africa (Pty) Ltd

Dear shareholders

We will shortly receive an update from the Chief Executive Officer (the SONA), and then the CFO will present the Budget speech on the 25th.

As strategic advisors to growth businesses in the country, we look forward to both of these presentations. Our job as advisors is to help our clients make informed decisions around where and how they allocate their capital and how to get the best risk-adjusted returns on their capital.

For a long time South Africa has been a hard sell.

Confidence is one of the strongest forms of economic stimulus; unfortunately, one of the challenges we have faced in the country for a long time has been one of negativity. In many ways, we have simply forgotten what it is like to live and work in a thriving emerging market economy.

If you only consume South African news through headlines, you would be forgiven for assuming the investment case is broken.

Yet when you step beyond sentiment and into what businesses and investors are actually doing, a more grounded, and in many respects, more encouraging picture starts to emerge.

We work closely with South African manufacturers and industrial businesses, and we see firsthand how decisions are being made in a highly constrained environment.

There is no denying the pressure. Input costs remain volatile, operating conditions are difficult, and confidence is fragile. Our funding base, the taxpayer, has shrunk dramatically.

At the same time, several important signals are moving in the right direction. Commodity prices across a number of base metals remain supportive for large parts of the value chain. The rand has shown unexpected resilience. The JSE has delivered returns that compare favourably with many global peers.

Long-delayed reforms are beginning to move from policy commitments into practical implementation.

These indicators matter, not because they look good in presentations, but because they shape real capital allocation decisions inside businesses. Simply exiting the “Grey-list” has contributed favourably to the business environment, and there are expectations that South Africa will secure two ratings upgrades.

What we are seeing on the ground does not fully align with the dominant narrative of economic collapse.

Ariston Capital is currently advising on multiple transactions where foreign buyers are choosing to acquire South African manufacturing and industrial businesses. These are not speculative or short-term positions. They are long-term commitments to local operations, management teams and productive capacity.

Importantly, these investors are not blind to South Africa’s risks. Load shedding, logistics constraints, policy uncertainty and currency volatility all feature prominently in their investment committees. However, after detailed due diligence and extensive engagement with leadership teams, they are still choosing to back South African businesses.

The reason is not optimism alone. It is a capability.

South African management teams have learned how to operate through prolonged disruption. Plants continue to run, orders continue to be fulfilled, and customers continue to be served under conditions that would have closed many operations elsewhere.

This does not make the environment easy.

Running an industrial business in South Africa remains exceptionally demanding. Leadership teams are constantly balancing short-term survival with longer-term competitiveness, while trying to protect jobs and maintain supplier relationships. Many of the hardest decisions being made inside companies are never visible outside boardrooms.

From a perspective of being shareholders in South Africa (Pty) Ltd, that reality matters.

Manufacturing and industrial activity still play a critical role in employment, regional economies and the country’s productive base. When investment decisions are postponed or cancelled, the consequences extend well beyond individual businesses. Equally, when companies continue to invest locally, the benefits flow into skills development, supplier ecosystems and long-term industrial capacity.

There is a clear contradiction in South Africa’s current investment story.

Public sentiment has become deeply pessimistic. At the same time, capital continues to find its way into well-run South African businesses.

It is very easy to get caught up in the narrative of annual growth at 1.3% annual growth in Gross Domestic Product (GDP), but if we consider that this translates into R90bn added to the economy and could potentially add another 300 000 to 500 000 jobs (taxpayers), this is momentum that we can build on.

The outlook is neither one of inevitable decline nor of sudden recovery. It is more nuanced than the public conversation usually allows. The operating environment remains difficult, and risk has not disappeared. Yet resilience, competence and long-term opportunity are still present across large parts of the industrial economy.

If South Africa is to attract more sustainable investment, it will require a more balanced narrative. One that acknowledges the pressure points, while also recognising where real progress and real capability exist. At the same time, after years of feeling powerless at the hands of a single shareholder bloc, the shareholder base is starting to take a more active role in defining the strategy of the country.

In time, this should unlock dividends for those who have been patiently investing in their businesses.

If you are cautiously optimistic about South Africa’s prospects and are considering a transaction, an acquisition or a capital raise in the local market, Ariston Capital would welcome a conversation to share perspectives and compare what we are seeing on the ground.