Private equity treading water

Private equity returns remained relatively flat for the third quarter ending September 2013, with a pooled internal rate of return (IRR) of 22.2% over a 10-year rolling period, down slightly from the second quarter’s 22.7%, according to the latest RisCura SAVCA South African Private Equity Performance Report.

Over five years, IRRs increased from 12.8% in June to 13.4% in September, showing continued medium-term improvement for the asset class. Over three years, it dipped to 16.9% from 17.1% in March.

Measured in US dollars, the IRRs dropped significantly over the short term as currency volatility took effect. Over three years, the asset class returned 5.8% in US dollars, down from 11.9% in June. Over 10 years, IRRs dipped to 20.4% from 21% in June. Positive returns were found over five years, with IRRs of 12.9%, up from 11% in June.

Compared to the leading public indices, the asset class marginally beat the FTSE/JSE All Share Total Return Index (ALSI TRI) and FTSE/JSE Shareholder Weighted Total Return Index (SWIX) over a 10-year period with returns of 22.7% versus 20.8% and 21.7% for the indices, respectively. However, in a theme continued from the previous quarter, the asset class lagged the Financial and Industrial Total Return Index (FINDI TRI), over three, five and 10 years, which returned a stellar 27.8%, 23.8% and 24.8% for the respective periods, compared to 16.9%, 13.4% and 22.7% for private equity. Copyright. HedgeNews Africa. February 2014.

To view the full report click here.