Private equity continued to post consistent returns in the third quarter, delivering a pooled internal rate of return (IRR) of 18.1% over a rolling three-year period, compared to 19.4% at the end of the previous quarter in June, according to the latest SAVCA RisCura South African Private Equity Performance Report. Over a rolling five-year period, the asset class delivered an IRR of 12.6%, compared to 12.9% the previous quarter, and over a rolling 10-year period, returns were marginally higher at 17.4%, compared to 17.2% at the end of June.
Measured in US dollars, the IRRs for the asset class are 17% over a rolling three-year period and 11.3% and 18.2% over a five-year and 10-year period, respectively. The difference in the IRR between the rand and US dollar returns is predominantly due to the difference in exchange rates between the start and end of the reporting period.
Rory Ord, head of RisCura Fundamentals, said: “Overall performance of the industry has been consistent with the numbers presented at the previous quarter-end. It is pleasing to note the continued recovery in valuations post the financial crisis, which has resulted in strong returns over the three-year period.”
Compared to the leading public indices, the sector produced stable returns, outperforming the FTSE/JSE All Share Index (ALSI) over all reported periods. Over three years it delivered 18.1% compared to the ALSI’s 15.4%, over five years it delivered 12.6% compared to 5.6% for the ALSI, and over 10 years it returned 17.4% compared to the ALSI’s 16.6%.
The asset class also outperformed the FTSE/JSE Shareholder Weighted Total Return Index (SWIX) and the FTSE/JSE Financial Index (FINDI) over five years, returning 12.6% compared to a return of 8.4% and 12.3% for the SWIX and FINDI, respectively. Over 10 years, private equity’s return of 17.4% lagged slightly behind that of the SWIX (19.2%) and FINDI (20.5%). Copyright. HedgeNews Africa – December 2012.
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