Private equity returns for the quarter ending December 2015 showed further weakness as the combined effects of weak commodity prices and slowing growth in China put pressure on the asset class. This is according to the latest RisCura SAVCA South African Private Equity Performance Report.
The pooled internal rate of return (IRR) over 10 years was 18.5% for the quarter ending December 2015, compared to 20.1% the previous quarter. Over a five-year period, private equity returned 14.8%, compared to 17.4% in September. Over three years, the asset class returned 15.2% compared to 15.7% the previous quarter.
Deborah O’Hanlon, senior analyst at RisCura says the decline in performance in the quarter can be attributed to a downward revaluation of some assets as trading conditions in South Africa remain strained.
In US dollars, the effect of a weak rand continued to weigh heavily on the asset class with 10-year IRRs returning 12.7% in December, compared to 15.8% in September. Over five years the asset class delivered negative returns for the first time as it was down 1.5% compared to a positive 4.7% in September. Over three years, it was down 4.7%, compared to a negative return of 2.1% the previous quarter.
Compared to leading market indices in South Africa, the asset class remained ahead of the FTSE/JSE All Share Total Return Index (ALSI TRI) and the FTSE/JSE Shareholder Weighted Total Return Index (SWIX TRI) over a 10, five and three-year period.
Over 10 years, it returned 18.5%, compared to 14.1% for the ALSI TRI and 14.7% for the SWIX TRI. The FINDI TRI returned 18.9% over 10 years.
Over five years, private equity returned 14.8%, compared to a return of 12.9% for the ALSI TRI and 14.2% for the SWIX TRI. The FINDI TRI returned 23.6% for the same period.
Over a three-year period, the asset class returned 15.2% compared to 12.2% for the ALSI TRI and 12.9% for the SWIX TRI. Over three years, the FINDI TRI returned 22.5%.
To download the full report, go to www.riscura.com.