Report: SA private equity comes out on top

According to the recent RisCura-SAVCA South African Private Equity Performance Report [download], private equity in SA yielded favourable returns over a 10-year period.

The report shows that private equity delivered a 10-year internal rate of return (IRR) of 17.7% at the end of September 2016, as opposed to 16.5% from the FTSE/JSE Financial and Industrial Index (FINDI TRI).

“The steady, attractive returns delivered by private equity is particularly appealing in the current volatile, low-returns environment,” says CEO of the Southern African Venture Capital and Private Equity Association (SAVCA), Erika van der Merwe, in a press release to Ventureburn.

SA private equity was also strong against the FTSE/JSE Shareholder Weighted Total Return Index (SWIX TRI), which had a 13.4% return, and 12.0% from the FTSE/JSE All Share Total Return Index (ALSI TRI) over the same period.

It is interesting to note that while all three opposing indexes had higher returns over a five-year period, with IRR reaching 14.5% and FINDI TRI at 22.8%, the former overtook them in the long-run.

“Our research shows that a lack of familiarity with private equity is reported by pension funds as the major reason for their not allocating capital to the asset class.

“In an effort to encourage inclusion of this asset class into Southern African institutional portfolios, SAVCA continues to intensify its efforts to promote the industry and create increased awareness of its positive performance impact, as well as of the track record of private equity in furthering environmental, social and governance (ESG) initiatives,” concludes van der Merwe.

Feature image: Ron Mader via Flickr.