RisCura-SAVCA South African Private Equity Performace Report
RisCura-SAVCA South African Private Equity Performace Report 30 September 2020
1. Foreword May 2021 We are pleased to release the September 2020 edition of the RisCura - SAVCA South African Private Equity Performance Report. This report tracks the performance of a representative basket of South African private equity funds and is published quarterly. The purpose of the report is to provide stakeholders in South African private equity with insight into industry returns, and to establish and maintain an authoritative benchmark for the measurement of private equity performance in this market. Since its inception in September 2010, this report has become a vital component in the marketing of the private equity industry. We would like to thank SAVCA members for making their performance data available, and for their commitment to this project. Heleen Goussard Head of Alternative Investment Services: RisCura Tanya van Lill Chief Executive Officer: SAVCA “This document contains confidential information and is protected by copyright law. Copyright in all information, material and logos are protected by both national and international intellectual property laws. Accordingly, any unauthorised copying, reproduction, retransmission, distribution, dissemination, sale, publication, broadcast or other circulation, or exploitation of this material will constitute an infringement of such protection. The copyright in all material of RisCura Holdings (Pty) Ltd (“RisCura”) and all its subsidiaries shall continue to vest in RisCura. The information contained in this document is provided ‘as is’ without warranty of any kind. The entire risk as to the result and performance of the information supplied in this document is assumed by the user and in no event shall RisCura be liable for any direct, consequential, or incidental damages suffered in the course of using the information contained herein as a result of the use of, or the infringement of any copyright laws. RisCura Solutions (Pty) Ltd and RisCura Invest (Pty) Ltd are authorised financial services providers.” 1 FOREWORD 2 PRIVATE EQUITY IN SOUTH AFRICA 3 METHODOLOGY 7 PRIVATE EQUITY RETURNS OVER TIME 8 HOW TO USE THIS REPORT 9 ABOUT 4 PERFORMANCE IN SOUTH AFRICA RANDS 5 PERFORMANCE IN US DOLLARS 6 LISTED EQUITY COMPARISON (ZAR) PREV NEXT 02
2. Private equity in South Africa Private equity is an asset class which differs in nature from most other assets, including listed equity. Typically, private equity fund investments show low correlation to quoted equity markets and are relatively illiquid, particularly in the early years. Private equity will normally show a drop in net asset value before showing any significant gains. This is often the effect of management fees and start-up costs on the relatively small capital base of a new fund. Private equity funds in South Africa typically follow a commitment and draw-down model, which means that investors commit a certain total of capital at the start of a fund, but are only requested to transfer cash to the private equity manager as investments are identified or costs are incurred. These funds typically return capital during the course of the fund’s life as investments are realised. South African private equity offers institutional investors the opportunity to invest in an asset class which has historically outperformed listed equity over the long term. It does, however, have a different nature from quoted equity and it is crucial that an institutional investor considers the appropriateness of private equity to its particular objectives. 1 FOREWORD 2 PRIVATE EQUITY IN SOUTH AFRICA 7 PRIVATE EQUITY RETURNS OVER TIME 8 HOW TO USE THIS REPORT 3 METHODOLOGY 9 ABOUT 4 PERFORMANCE IN SOUTH AFRICA RANDS 5 PERFORMANCE IN US DOLLARS 6 LISTED EQUITY COMPARISON (ZAR) PREV NEXT 03
3. Methodology Methods of measuring performance The most widely accepted method for calculating returns of private equity funds is the annualised internal rate of return (IRR) achieved over a period of time. As a sense check to the IRR measure, we also use the Times Money performance measure. This report measures performance in two ways: by ‘since inception’ and ‘end-to-end’ (over three, five and ten years. The IRR calculated in this report is net of fees over all periods. Times Money IRR since inception This is the most widely used IRR measure of private equity performance. It measures the return of PE funds based on all cash flows in and out of the fund, as well as the remaining net asset value of the fund. This therefore most closely reflects the return an investor would achieve if they invested at the start of the fund. This is the most likely scenario in South Africa where investors in private equity funds are locked in for the life of the fund, and must catch up initial fees when joining a fund after the initial investors. End-to-end IRR End-to-end IRRs allow the computation of the return of groups of private equity funds which do not necessarily have the same inception date. This calculation also allows a better comparison of private equity returns to those of other asset classes over similar periods. While this method has advantages, it must be noted that it allows the returns of funds at different life cycle stages to be combined. Where the period selected contains more new funds than older funds, the return will likely include a higher balance 1 FOREWORD 2 PRIVATE EQUITY IN SOUTH AFRICA 3 METHODOLOGY 7 PRIVATE EQUITY RETURNS OVER TIME 8 HOW TO USE THIS REPORT 9 ABOUT 4 PERFORMANCE IN SOUTH AFRICA RANDS of fees than a time period with more older funds. The longer term IRRs are considered to be the most indicative of private equity performance across different stages of the economic cycle, and are considered to be the headline measures. Shorter term returns should be viewed with caution as private equity is a long term investment. However, shorter period returns may be indicative of the general performance of private equity over this short period. 5 PERFORMANCE IN US DOLLARS Times Money is the ratio of total capital invested to total capital returned and remaining value. This is a useful crosscheck of IRR measures, and is easily understandable. While IRR calculations are heavily dependent on the length of time that capital has been invested, Times Money does not take time into account. A Times Money in excess of 1 means that value has been created for the investor. Public market equivalent (PME) This measure seeks to equate the heavily timing-dependent returns of private equity funds with the returns of public market indices. The measure is a ratio of the net outflows from PE funds re-invested into the public index to the end of the fund’s life, divided by the inflows into a PE fund invested in the public index until the end of the fund’s life. A ratio of above 1 reflects outperformance of private equity, while a ratio under 1 reflects under performance. 6 LISTED EQUITY COMPARISON (ZAR) PREV NEXT 04
4. Performance in South African Rands (ZAR) Pooled IRR by time period Pooled IRR by vintage year Pooled IRR by fund size 10% 40% 14% 9.7% 36.3% 8% 30% 6% 6% 0 3 YEAR POOLED IRR 2.0 0.65 0.90 Times Money by fund size 2.22 0.31 0.2 0.27 1.28 0.35 1.36 0.47 1.10 0.43 2013-2015 2010-2012 2007-2008 2005-2006 UNDER R500M UNREALISED TIMES MONEY UNREALISED TIMES MONEY REALISED TIMES MONEY REALISED TIMES MONEY REALISED TIMES MONEY 2 PRIVATE EQUITY IN SOUTH AFRICA 3 METHODOLOGY 7 PRIVATE EQUITY RETURNS OVER TIME 8 HOW TO USE THIS REPORT 9 ABOUT 4 PERFORMANCE IN SOUTH AFRICA RANDS 5 PERFORMANCE IN US DOLLARS 6 LISTED EQUITY COMPARISON (ZAR) OVER 1BN BETWEEN R500M AND R1BN UNREALISED TIMES MONEY 1 FOREWORD 0.90 0.82 0.0 2000-2004 3 YEAR PRE 2000 5 YEAR 1.0 0.85 0.5 0.0 10 YEAR 0.52 0.83 0.54 0.5 0.0 1.5 0.41 1.0 0.4 OVER 1BN 2.0 1.5 0.59 BETWEEN R500M AND R1BN 2.74 2.5 0.53 0.6 UNDER R500M POOLED IRR 3.0 1.2 0.8 0% Times Money by vintage year 0.48 1.0 2% POOLED IRR Times Money by time period 1.4 7.7% 2007-2008 5 YEAR 2000-2004 10 YEAR 8.5% 0.1% PRE 2000 -2% 9.0% 2013-2015 -1.8% 6.6% 4% 10% 0% 2010-2012 2% 10.8% 8% 20% 4.5% 12.5% 10% 2005-2006 4% 12% 32.5% PREV NEXT 05
5. Performance in US Dollars Pooled IRR by time period Pooled IRR by vintage year 2% 0% Pooled IRR by fund size 40% 0.1% 6% 1.3% 30% -2% 5.6% 34.7% 28.3% 4% 20% 4.2% -4% 10% -6% 3.1% -8% 0 -8.5% POOLED IRR 0.8 2013-2015 2010-2012 2007-2008 1.5 2.5 2.0 0.53 0.73 2.60 0.59 1.99 0.14 1.0 0.30 0.2 0.29 1.0 1.5 0.4 1.02 0.17 0.90 0.5 0.67 0.40 0.25 0.96 0.72 0.76 BETWEEN R500M AND R1BN OVER 1BN 0.5 0.41 2013-2015 2010-2012 0.0 2007-2008 3 YEAR 2005-2006 5 YEAR PRE 2000 10 YEAR 0.51 0.38 0.0 2000-2004 0.0 UNDER R500M UNREALISED TIMES MONEY UNREALISED TIMES MONEY UNREALISED TIMES MONEY REALISED TIMES MONEY REALISED TIMES MONEY REALISED TIMES MONEY 1 FOREWORD 2 PRIVATE EQUITY IN SOUTH AFRICA 3 METHODOLOGY 7 PRIVATE EQUITY RETURNS OVER TIME 8 HOW TO USE THIS REPORT 9 ABOUT OVER 1BN Times Money by fund size 3.0 0.44 BETWEEN R500M AND R1BN POOLED IRR Times Money by vintage year 1.2 0.28 UNDER R500M POOLED IRR Times Money by time period 0.6 2005-2006 3 YEAR PRE 2000 5 YEAR 0.1% 0% 2000-2004 -10% 10 YEAR 2% -7.3% -10% 1.0 2.3% 1.2% 4 PERFORMANCE IN SOUTH AFRICA RANDS 5 PERFORMANCE IN US DOLLARS 6 LISTED EQUITY COMPARISON (ZAR) PREV NEXT 06
6. Listed equity comparison (ZAR) CAGR Performance compared to listed equity markets 1.15 Pooled IRR ALSI TRI* FINDI TRI* SWIX TRI* 2010Q1 - 2020Q1 9.7% 9.6% 12.2% 9.1% 2015Q1 - 2020Q1 4.5% 4.8% 2.1% 2.9% 2017Q1 - 2020Q1 -1.8% 2.4% -1.5% -0.4% 1.10 1.05 1.00 PME Year Period 0.95 0.90 0.85 *Listed index returns are before fees. 0.80 0.75 2011-2012 2013-2014 ALSI Direct Alpha 2019-2020 SWIX 1.10 2.5% 2% 1.07 1.00 1.5% 1% 0% -0.7% -0.6% -1% -0.1% 0.90 -0.3% -1.3% 0.97 1.00 1.04 0.98 0.99 0.97 0.92 0.85 0.80 -2% -4% 2017-2018 Public market equivalent results by time period 3% -3% FINDI 2015-2016 -3.7% -3.9% -5% 0.70 0.60 10 YEAR FINDI 5 YEAR ALSI 3 YEAR 10 YEAR SWIX FINDI 1 FOREWORD 2 PRIVATE EQUITY IN SOUTH AFRICA 3 METHODOLOGY 7 PRIVATE EQUITY RETURNS OVER TIME 8 HOW TO USE THIS REPORT 9 ABOUT 4 PERFORMANCE IN SOUTH AFRICA RANDS 5 PERFORMANCE IN US DOLLARS 5 YEAR ALSI 3 YEAR SWIX 6 LISTED EQUITY COMPARISON (ZAR) PREV NEXT 07
7. Private equity returns over time SA PE pooled rolling IRR year on year returns (ZAR) Distribution of fund performance by vintage year 25% 18.00% 16.00% 15.77% 20% 14.00% 13.77% 12.00% 15% 10.00% 9.58% 10% 8.00% 7.30% 6.00% 5% 5.66% 4.00% 0% 4.63% 2.00% 0.00% 10 YEAR 5 YEAR SEP 20 DEC 19 MAR 19 JUN 18 SEP 17 DEC 16 MAR 15 JUN 15 SEP 14 DEC 13 MAR 13 JUN 12 -5% 3 YEAR 2005-2008 75% PERCENTILE 1 FOREWORD 2 PRIVATE EQUITY IN SOUTH AFRICA 3 METHODOLOGY 7 PRIVATE EQUITY RETURNS OVER TIME 8 HOW TO USE THIS REPORT 9 ABOUT 4 PERFORMANCE IN SOUTH AFRICA RANDS 5 PERFORMANCE IN US DOLLARS 2010-2015 MEDIAN 25% PERCENTILE 6 LISTED EQUITY COMPARISON (ZAR) PREV NEXT 08
8. How to use this report Useful Information determine these valuations. RisCura has not verified that these Guidelines have been adhered to. Returns of cash flow and portfolio value data from private equity managers are the primary source for information included in this Report. Only South African Rand denominated funds have been included in this Report, and therefore none of the returns included are affected by exchange rate movements. The IRR performance calculation solves for the discount rate that makes the Net Present Value of a set of cash flows equal to zero. The calculation is based on cash-on-cash returns over equal periods, modified for the residual value of the fund’s equity (NAV). The residual value attributed to each respective group being measured is incorporated as its ending value. Unrealised Times Money is the ratio of the carrying value of portfolio investments not yet returned to investors divided by total cash invested. Vintage Year is defined as the year in which a fund first draws down capital from its investors. Definitions CAGR is the compound annual growth rate. Committed capital is the value of dedicated investment funds pledged by the investors of a private equity fund and available for investment. This is a proxy for the size of the fund. The database accounts for cash flows on a daily basis wherever possible otherwise a monthly basis, and NAVs on a quarterly basis. Fund Size is determined by the committed capital of a fund. IRRs are money-weighted returns that should be compared to time-weighted returns with caution. Time-weighted returns are used to measure returns in most asset classes where frequent valuations are available. The End-to-End performance calculation is similar to the since inception IRR, however, it is measuring the return between two points in time. The calculation takes into account the opening NAV, the in-period cash flows and the closing NAV. Returns are then annualised for comparability. PME Public Market Equivalent is a measure that determines whether private equity returns have exceeded or underperformed a public market. A PME score of more than one indicates outperformance of private equity. The pool of funds has been split into subsets where this would enhance the user’s understanding of returns. However, this has been balanced with confidentiality considerations, and no such subsets include fewer than four funds. Pooled IRR aggregates or “pools” all cash flows and ending NAVs to calculate a money-weighted return. Most funds included in this Report have unrealised investments, and therefore rely on the valuation of these investments to determine returns. All participating fund managers are members of SAVCA and apply the International Private Equity and Venture Capital Valuation Guidelines to Realised Times Money is the ratio of cash returned to investors divided by total cash invested. Total Times Money is the sum of the Realised and Unrealised Times Money. 1 FOREWORD 2 PRIVATE EQUITY IN SOUTH AFRICA 3 METHODOLOGY 7 PRIVATE EQUITY RETURNS OVER TIME 8 HOW TO USE THIS REPORT 9 ABOUT 4 PERFORMANCE IN SOUTH AFRICA RANDS 5 PERFORMANCE IN US DOLLARS 6 LISTED EQUITY COMPARISON (ZAR) PREV NEXT 09
9. About About RisCura About SAVCA RisCura is a purpose-driven global investment firm that offers investors unique insights and guidance to help shape the future world we all want to live in whilst still achieving and exceeding financial goals for its clients. The Southern African Venture Capital and Private Equity Association (SAVCA) is the industry body and public policy advocate for private equity and venture capital in Southern Africa, representing about R165 billion in assets under management, through 150 members. SAVCA promotes Southern Africa private equity by engaging with regulators and legislators on a range of matters affecting the industry, providing relevant and insightful research on aspects of the industry, offering training on private equity and creating meaningful networking opportunities for industry players. RisCura is known for its leading focus on liability-driven investing, responsible investment practices, investment transparency, reliable valuations, independent risk assessments, world-class performance standards and excellent returns, which has brought about a major systemic shift in the African investment landscape. Through constantly exploring new ways to invest with care and meet the needs of clients, RisCura finds unique investment opportunities for its clients. For more information visit www.savca.co.za. Today RisCura advises clients with combined assets of more than 150bn. The company strives to steer global capital towards investments that benefit society and the planet in the long run. RisCura has won numerous industry awards. The firm has a big Africa-focus: with a footprint in South Africa, United Kingdom, China, Hong Kong, Botswana, Kenya, Mauritius, Namibia, Nigeria, Zambia and Ireland. For more information about its investment services and approach, visit the RisCura website: https://www.riscura.com 1 FOREWORD 2 PRIVATE EQUITY IN SOUTH AFRICA 3 METHODOLOGY 7 PRIVATE EQUITY RETURNS OVER TIME 8 HOW TO USE THIS REPORT 9 ABOUT 4 PERFORMANCE IN SOUTH AFRICA RANDS 5 PERFORMANCE IN US DOLLARS 6 LISTED EQUITY COMPARISON (ZAR) PREV NEXT 10
info@riscura.com www.riscura.com
2. Private equity in South Africa Private equity is an asset class which differs in nature from most other assets, including listed equity. Typically, private equity fund investments show low correlation to quoted equity markets and are relatively illiquid, particularly in the early years. Private equity will normally show a drop in net asset value
The SAVCA 2021 Private Equity Industry Survey is presented by SAVCA and EY. The survey was based on responses from over 50 . In 2020, investments in Infrastructure and Real Estate represented over 41.7% of the cost of total investments. By number, investments in the Manufacturing (28 in SA and 8 outside SA) and Services (22 in SA and 12 .
Remuneration in private equity 48 The FirstRand group's contribution to South African private equity A short tribute 50 Mezzanine funding finds its place A sector emerges within South African private equity 51 A future for fund of funds Broadening access to private equity 52 What a difference a few decades make
My Country South Africa I am an African – I am a South African I am an African Speech The most famous, and vivid*, description of South African identity was expressed in Thabo Mbeki’s speech as Deputy President at the time of the adoption* of the new Constitution of South Africa on 8 May 1996. The speech is called “I am an African.”
South Africa colo supply - the largest market in the entire AME region. South African colo supply - an evolving market structure. South African colocation - a fragmented market here, a concentrated market there. South African colo outlook - a 2018 inflection point. South Africa: Key colocation player summary. South Africa key player .
the apartheid policy among the South African recipients of leadership grants. We call upon individual Americans to join the growing international boycott of South African goods. We demand that the United States Armed Forces cease military maneuvers in cooperation with South African forces and the use of South African waters or bases.
Hugo Chávez, Banjul, 20061 Introduction Venezuela's African Agenda intends to be a new model of South-South cooperation. This article explores which has been the African response through the study of the relations with Algeria, Gambia and South Africa. South-South cooperation is a concept that involves activities in almost all realms of in-
SOUTH AFRICAN PHARMACY COUNCIL SOUTH AFRICAN PHARMACY COUNCIL ANNUAL REPORT 2019 SOUTH AFRICAN PHARMACY COUNCILSAPC Building 2019ANNUAL REPORT 591 Belvedere Street, Arcadia, 0083 Private Bag X40040, Arcadia, 0007 Tel: 0861 7272 00 or 0861 SAPC 00 Fax: 27 (0) 12 321 1492 or 27 (0) 12 321 1479 E-mail: customercare@sapc.za.org Website: www.sapc .
This, too, is still basic to conventional literary criticism and is also open to seriou objection. De Wette in 1805 assigned Deuteronomy to the time of Josiah, such that pentateuchal matter considered dependent on Deuteronomy would be still later than it; 160 years later this is still commonly held, despite opposition. In the first half of the 19th century rival theses arose alongside the .
