Private equity funds have delivered a “sturdy performance” over the past decade, the latest quarterly report by the Southern African Venture Capital and Private Equity Association (Savca) has revealed.
The second-quarter RisCura–Savca South African Private Equity Performance Report, released on Wednesday, showed that, over the ten years to June 2014, private equity funds yielded a yearly internal rate of return of 18.6%.
However, the private equity returns fell short when compared with the JSE All-Share Index (ALSI), which delivered a return of 20.9%, and the Shareholder Weighted Index (SWIX), with a return of 21.6%, over the last ten years.
The reported five-year private equity returns, at 20.2%, had reached its highest since the third quarter of 2010 and continued a post-crisis recovery.
“These returns marginally trail the five-year ALSI (at 21.4%) and SWIX (at 21.1%) performance,” the report noted.
The “strong and consistent” returns record, in addition to continued financial market recovery since 2008, had been supporting a “fresh wave” of fundraising by local managers, with many new funds launched in the past year, Savca CEO Erika van der Merwe said in a statement.
“We are seeing interest from both local and international institutional investors, who are seeking diversification of their portfolios across asset classes and by geographic region,” she said.
Despite the challenging economic environment, RisCura head of independent valuation Rory Ord stated that private equity continued to offer strong performance and diversification benefits.
“New fundraising activity has been well supported by the number of exits that have recently occurred in the industry and returns continue to show a healthy trend post the financial crisis.”