SA private equity delivers steady returns

SA private equity delivers steady returns

2013-10-08 18:45

Cape Town - The asset class continues to deliver steady returns that compare favourably with those reported for listed equity, according to a statement released on Tuesday.

The RisCura Savca South African Private Equity Performance Report for the second quarter of 2013 show that private equity has an important returns-boosting role in a diversified institutional portfolio, said Savca CEO Erika van der Merwe.

“The steady recovery in global financial markets is evident in the recent performance trends for South African private equity,” said Van der Merwe.

RisCura’s latest quarterly survey shows that South African private equity delivered an annualised return of 21.7% over ten years, net of fees.

This ten-year return as at June 2013 is on par with the returns reported for the March 2013 quarter and is higher than the 17% reported in June 2012.

The highest ten-year return reported was for December 2011 when it reached 23%.

“Our research has shown much increased deal-making activity in South Africa over the past two years,” said head of RisCura Fundamentals Rory Ord.

“In the 3 years after the financial crisis hit, deal making was difficult as buyer and seller expectations were so far apart, but this has certainly improved since mid-2011.”

Private equity returns over a five-year horizon reflect the effect of the global financial crisis, while a three-year timeframe South African private equity is showing signs of post-crisis recovery, with returns having trended upwards since 2010, the statement noted.

Private equity returns are calculated as an internal rate of return (IRR) and returns for listed equity are calculated as a compound annual rate of return.