Private equity returns continued their upward traction in the third quarter of this year according to the latest RisCura SAVCA South African Private Equity Performance Report. The pooled internal rate of return (IRR) over 10 years rose to 21.7%, up from 20.5% in the previous quarter. The increase can be attributed to good exit values realised in the quarter.
Over a rolling five years, it returned 18.5%, up from 17% for the quarter ending in March. Returns over three years increased to 16.4% from 15% in March.
In US dollars, the asset class showed improvement from the previous quarter’s performance with returns of 18.1% in June over a 10-year period, compared to 16% the previous quarter. Over five years, returns increased to 11.3% from 8.3% in March. Over the shorter-term three-year rolling period, it returned to positive territory with performance of 1.8% compared to a negative return of 1.2% the previous quarter.
The sharp weakening of the rand compared to the US dollar in recent periods has had a significant impact on US dollar returns, says Rory Ord, head of RisCura Fundamentals.
“Since most of the weakening has happened in the past three years, this is the period that has been most affected by the depreciation,” he says. “The rand recently hit record lows against the dollar, but has recovered over the last week in response to an increase in interest rates locally.”
Over a 10-year period, the asset class outperformed all the major indices with a pooled IRR of 21.68%, compared to 17.1% for the FTSE/JSE All Share Total Return Index (ALSI TRI), 21% for the Financial and Industrial Total Return Index (FINDI TRI), and 18.1% for the FTSE/JSE Shareholder Weighted Total Return Index (SWIX TRI).
Over five years, the asset class returned 18.5%, trailing the FINDI with a return of 29.2% and the SWIX with a return of 19.5%. Over the same period, the ALSI returned 17.7%.
Over three years, it lagged the major indices, returning 16.45% compared to 19% for the ALSI, 29.2% for the FINDI and 20.6% for the SWIX. Copyright. HedgeNews Africa – November 2015.
To download the full report, click here.