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New index reveals that private equity and venture capital beat traditional stocks for investor returns


According to a new report, the Australian private equity (PE) and venture capital (VC) industries generated attractive returns over a one, three and five year period, as of June 2010, in comparison to traditional stock indexes.

A new index,  born of a partnership between AVCAL (The Australian Private Equity & Venture Capital Association), the association promoting the interests of the PE and VC industry in Australia, and Cambridge Associates, a provider of independent research and investment advice, concludes that Australian PE and VC deals have generated attractive returns when compared with the S&P/ASX 300 Index and the S&P/ASX Small Ordinances Index over the five year period ending June 2010.

According to the Index, Australia PE and VC have generated returns on the original investment at a ratio of 15.6 in one year and 6.3 in five years when compared to the 13.1 and 4.5 the S&P/ASX 300 and the 11.2 and 2.7 the S&P/ASX Small Ordinaries returned in one and five years.

“We are very pleased to see the data reflecting how Australian private equity as a whole has performed very well despite challenging market conditions,” said the Chief Executive of AVCAL Katherine Woodthorpe in a media statement.

“Nevertheless, while investments have picked up pace, and growth funds in particular have been active despite the global financial crisis, conditions in the fundraising, debt and exit markets remain challenging. However, as the exit market improves over time we should expect to see continued attractive returns to fund investors in general.”

AVCAL and Cambridge Associates will release performance data every three months and, as the industry grows, additional data will be published.

According to another index, the 2011 Global Venture Capital and Private Equity Country Attractiveness Index, Australia ranks as the 7th most attractive country for investors in VC and PE.

Read the AVCAL and Cambridge Associate report here. Read Australia’s VC and PE country attractiveness profile here.

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