Pickup in new PE deal activity supported by 22% return to investors
28 May 2014
New data released today by the Australian Private Equity & Venture Capital Association Limited (AVCAL) confirms that private equity and venture capital funds in Australia posted returns of 22% in the 12 months to 31 December 2013, outperforming the ASX 300 Index by over 200 basis points.
The Cambridge Associates LLC Australia Private Equity and Venture Capital Index (the CA Australia Index) – the leading independent performance benchmark for the asset class – reflected a significant pick-up in performance in the final quarter of 2013, gaining nearly 10% compared to the ASX 300 Index which rose 3% in the same quarter.
The CA Australia Index also outperformed the ASX 300 Index over 1-year, 3-year, 10-year and 15-year time horizons, underscoring the higher returns from private equity for investors over multiple time periods.
“This is a good set of numbers,” said AVCAL Chief Executive Yasser El-Ansary. “The index has shown strong returns for the last six consecutive quarters, and the results from this most recent period are especially positive.”
“We’re seeing significant new deal activity within the private equity industry at the moment, and we expect that many funds will maintain a focus on identifying new investment opportunities where growth can be unlocked through the injection of capital and skills,” said Mr El-Ansary.
“The 10- to 15-year returns demonstrate how investors with long-term horizons have been the big winners from this asset class,” El-Ansary said.
Cambridge Associates LLC Australia/AVCAL Index Returns for the period ending 31 December 2013
The Cambridge Associates LLC indices are an end-to-end calculation based on data compiled from 64 Australia private equity and 25 Australia venture capital funds, including fully liquidated partnerships, formed between 1997 and 2013. All S&P index returns are based on Accumulation Index returns. All returns are reported on an annualized basis.
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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Author: Adrian O’Shannessy, Director, Greenwoods & Herbert Smith Freehills
Author: Dr Kar Mei Tang, Head of Policy and Research, AVCAL