Private equity company Ethos is teaching corporate South Africa a fabulous lesson: Those companies with strong balance sheets in tough economic times are in a position to cherry pick bargains when the going gets tough. In this case, it will acquire a sizeable stake in investment management company Brait, at a deeply discounted price.

A debt spiral is a terrible thing and investment holding company Brait knows all about it. Cash flush in 2015, the company went on a shopping spree at the height of the equity cycle, acquiring itself a tidy portfolio of assets. But some investments, notably into UK fashion retailer New Look, turned out to be less than astute and the slowing global economy meant that even the good assets couldn't help Brait dig itself out of the hole it was in.

This meant that in the last financial year (ending March 30th 2019) the net asset value of its investment portfolio declined by 25% to R41.80 per share (from R130 per share in March 2016). By the end of the next six months to September 2019, it had declined by a further 9% to R38 per share.

In the 2019 financial year, Brait's net debt to...