Solid returns from private equity

Private equity returns, measured as annualised internal rates of return (IRR), have delivered solid performance for the quarter ending June 2017, returning 13.8% over 10 years. This is according to the latest RisCura SAVCA South African Private Equity Performance Report.

The JSE All Share Index (ALSI) returned 9.3% in total returns for the same period. The JSE Share-Weighted Index (SWIX) gained 10.3%, while the JSE Financials and Industrials Index (FINDI) returned the highest with 14.4%.

Over three years, private equity returned 13.6% considerably beating all indices, which returned 3.4% (ALSI), 4.8% (SWIX) and 7.8% (FINDI).

Only the FINDI has beaten the asset class over five years with a return of 18.5% versus 13.7% for private equity.

According to Owen Maubane, chairman and chief executive officer of Johannesburg-based private equity firm Senatla Capital, deal flow in the quarter was still partially driven by companies’ needs to meet Black Economic Empowerment ownership targets.

“In addition, we saw multinationals both dispose of assets in private companies and make bolt-on acquisitions,” he says. “There was also an increase in the acquisition of distressed assets and capital restructurings of existing portfolio companies, amid tough conditions in construction, infrastructure and mining.”

In US dollars, 10-year returns were 9%, down from 13.8% for the 10 years to June 2016. Over five years, returns were up markedly from 1.3% the previous quarter to 3% at the end of June. This is also a considerable increase from the negative 2.8% return for the five years ending June 2016. Copyright. HedgeNews Africa – November 2017.

To read the full report, click here.