Private equity funds rise to top of pile

Domestic private-equity funds outperformed listed equities in the three years to the end of the first quarter as funds sold investments profitably and innovative risk-assessment models paid off.

Private-equity funds, which invest in unlisted companies, fared best against the all share index, with a public market equivalent (PME) score of 1.19.

A score above one indicates private equity funds outperformed listed shares.

This is according to the second-quarter survey of participating firms RisCura, an independent investment services provider, conducted with the SA Venture Capital and Private Equity Association (Savca).

Private equity funds also outperformed financials and the industrials index, along with the shareholder weighted all share, with PME scores of 1.11 and 1.16, respectively during the threeyear period.

They also outperformed the market over 10 years, except for financial and industrial shares.

Savca CEO Tanya van Lill said the outperformance was due to “innovative and sophisticated risk assessment models” private equity firms use when making their decisions and the portfolio companies either being sold or paying dividends during the investment period.

“They also have access to a wide network of business partners and strategic advisers, and shift strategy to meet market requirements,” said Van Lill.