Private equity has gained traction after dropping marginally in the third quarter according to the latest RisCura SAVCA South Africa Private Equity Performance Report. The pooled internal rate of return (IRR) over a rolling 10 years strengthened from 18.5% in September to 19.1% in December. The increase can be attributed to strength in equity markets which has resulted in good exit prices for private equity funds.
After dropping to 17.3% at the end of September from 20.2% in June, five-year rolling returns edged up marginally to 17.7% in December. Three-year rolling returns remained relatively flat at 14.1%, down slightly from September’s 14.4%.
In US dollars, asset class growth continues to take strain as the rand struggles against leading global currencies. Over 10 years, it returned 13.8%, down from 14.8% in September and 14.9% in June. Five-year returns continued on a downward trend with returns of 16.4% in June, 11.2% in September and 10.5% in December. After a marked improvement from -2.8% in June to 2.2% in September, returns over three years slipped to 1.3% in December.
Versus the major public indices, private equity held its own over a 10-year period with an IRR of 19.1% versus 18% for the FTSE/JSE All Share Total Return Index (ALSI TRI) and 18.6% for the FTSE/JSE Shareholder Weighted Total Return Index (SWIX TRI). It marginally underperformed the Financial and Industrial Total Return Index (FINDI TRI), which returned 20.7%.
Over three years, private equity lagged the other major indices, returning 14.1% compared to 19.5% for the ALSI TRI, 31.6% for the SWIX TRI, and 21.6% for the FINDI TRI. Over five years, the asset class delivered a pooled IRR of 17.7%, compared to 16% for the ALSI TRI, 18% for the SWIX TRI, and 25.2% for the FINDI TRI. Copyright. HedgeNews Africa – May 2015.
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