Private equity posts 23% return over last 12 months
21 August 2014
Australian private equity and venture capital outperformed the listed market by over 10% in the 12 months to 31 March 2014, according to new data released today by the Australian Private Equity and Venture Capital Association Limited (AVCAL) and Cambridge Associates.
The Cambridge Associates LLC Australia Private Equity and Venture Capital Index (the CA Australia Index) posted a gain of 23%, compared to the S&P/ASX 300 Index which returned just under 13% over the same one-year period.
The CA Australia Index – which is the leading independent performance benchmark for the private equity and venture capital asset class – showed continuing outperformance by gaining 3.3% in the first quarter of 2014, after a very positive final quarter in 2013. The 3-year, 10-year and 15-year time horizons also showed greater returns from private equity and venture capital compared with listed equities.
“It’s encouraging to see such a strong performance over the past year,” said AVCAL Chief Executive Yasser El-Ansary. “One of the most important observations from this latest data is that when you look at long-term returns – which are reported net of fees and costs – across the industry, you see very compelling evidence of why this asset class should be a feature of all diversified portfolios for institutional investors.”
“Our asset class has a long track record of generating above-normal returns for super funds and other investors over many years. The returns are a direct reflection of the work done by fund managers in partnering with their portfolio companies, and driving a clear growth strategy which expands businesses and boosts economic and employment opportunities,” said Mr El-Ansary.
Eugene Snyman, Managing Director at Cambridge Associates’ office in Sydney, Australia, said: “The strong returns experienced in Australia rewarded investors who stayed allocated and invested in the asset class. In particular, many institutional investors who followed a disciplined manager selection and implementation strategy achieved a net of fees return in excess of 500bps above listed markets over the long-term.”
Cambridge Associates LLC Australia/AVCAL Index Returns for the period ending 31 March 2014
The Cambridge Associates LLC indices are an end-to-end calculation based on data compiled from 60 Australia private equity and 25 Australia venture capital funds, including fully liquidated partnerships, formed between 1997 and 2013.
1 Pooled end-to-end return, net of fees, expenses, and carried interest.
2 mPME = Modified Public Market Equivalent
3 Value-Add (bps) is calculated as the difference between the CA Index return and the S&P/ASX 300 Index mPME return.
Sources: Cambridge Associates LLC, Bloomberg L.P., Standard & Poor's, Thomson Reuters Datastream, UBS AG and UBS Global Asset Management.
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About Cambridge Associates
Founded in 1973, Cambridge Associates is a provider of independent investment advice and research to institutional investors and private clients worldwide. Today the firm serves over 950 global investors and delivers a range of services, including investment consulting, outsourced investment solutions, research and tools (Research Navigatorsm and Benchmark Calculator), and performance monitoring, across asset classes. The firm compiles the performance results for over 5,400 private partnerships and their more than 68,000 portfolio company investments to publish its proprietary private investments benchmarks, of which the Cambridge Associates LLC U.S. Venture Capital Index® and Cambridge Associates LLC U.S. Private Equity Index® are widely considered to be among the standard benchmark statistics for these asset classes. Cambridge Associates has more than 1,100 employees serving its client base globally and maintains offices in Arlington, VA; Boston; Dallas; Menlo Park, CA; London; Singapore; Sydney; and Beijing. Cambridge Associates consists of five global investment consulting affiliates that are all under common ownership and control. For more information about Cambridge Associates, please visit www.cambridgeassociates.com.
The Australian Private Equity & Venture Capital Association Limited (AVCAL) is a national association which represents the private equity and venture capital industries. AVCAL's members comprise most of the active private equity and venture capital firms in Australia. These firms provide capital for early stage companies, later stage expansion capital, and capital for management buyouts of established companies. www.avcal.com.au
Author: Adrian O’Shannessy, Director, Greenwoods & Herbert Smith Freehills
Author: Dr Kar Mei Tang, Head of Policy and Research, AVCAL