Australian private equity continues to outperform stocks

The Cambridge Associates Australia Private Equity and Venture Capital Index (CA Australia Index), which measures private equity and venture capital returns in Australia ‘s 52 private equity and 19 venture capital funds, has outplayed the S&P/ASX 300, over all time horizons for up to 10 years, according to the latest quarterly report.

For the third quarter of 2011, the CA Australia Index had annualized returns of 4.79%, 3.63%, 3.92% and 7.41% over one, three, five and 10 years, respectively. In contrast, the S&P/ASX 300 recorded negative returns over all corresponding periods, with the exception of the 10-year horizon.

Katherine Woodthorpe, CEO of AVCAL, commented: "The consistent outperformance of Australian private equity funds when compared to public equities indices is particularly noteworthy given that post-global financial crisis, the total returns for private equity and venture capital investments have not exhibited the same kind of volatility and downside seen in the public equity markets."

She added these results have demonstrated a major benefit of private equity as an asset class to institutional investors - helping their wider portfolio returns weather short-term public market volatility, while at the same time targeting superior long-term returns.

The results, however, indicate slowing growth in the industry in several different time periods. According to the comparable report from November last year, the average IRR for Australian private equity stood at of 8.59%, 2.42%, 4.23% and 7.81% over one, three, five and 10 years, respectively for the quarter ended June 30, 2011.

In 2011, Australia saw total private equity investments worth A$3.5 billion ($3.8 billion) in 87 companies, significantly higher than its 2010 record of A$2.3 billion. Venture capital investment, meanwhile, amounted to $120.6 million in 76 companies, the level lowest since 2007.

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• Topics
• Australasia
• Performance
• Australia
• Performance
• AVCAL