Private equity returns edge up in first quarter

Private equity returns remained level to slightly up in the first quarter of this year according to the latest RisCura SAVCA South Africa Private Equity Performance Report. Over 10 years, the pooled internal rate of return (IRR) rose to 20.5%, up from 19.1% at the end of December and 18.5% at the end of September. The increase can be attributed to the continuing upward movements of the local equity market and strong recent exit activity in the asset class, according to Rory Ord, head of RisCura Fundamentals.

Over five years, the asset class returned 17% for the quarter ending in March, down slightly from the previous quarter’s 17.7%. Three-year rolling returns increased to 15% from December’s 14.1%.

Over a 10-year rolling period, measured in US dollars, the asset class showed a marked improvement rising to 16% at the end of March compared to 13.8% in September and 14.8% in September. Medium-term figures measuring rolling returns over five years were down, posting 8.3% in March compared to 10.5% in December and 11.2% in September. This follows a relatively stable rand between 2005 and 2011, and significant weakening of the currency from mid-2011.

Private equity suffered the most in US dollar terms over a rolling three-year period due to the rand’s poor performance against the US dollar. It returned a negative 1.2% compared to 1.3% the previous quarter and 2.2% in September.

Against major public indices, the asset class held its own over the longer term, returning 20.5% over a rolling 10-year period, compared to 18.1% for the FTSE/JSE All Share Total Return Index (ALSI TRI), 21.6% for the Financial and Industrial Total Return Index (FINDI TRI), and 19.1% for the FTSE/JSE Shareholder Weighted Total Return Index (SWIX TRI). Over three years, the asset class lagged the major indices, returning 15%, versus 19.4% for the ALSI TRI, 21.4% for the SWIX TRI and 30% for the FINDI TRI.

To download the full report, click here.