Increasing the pool of capital available for high-growth business and investment in start-ups will amplify job growth and boost the economy, as well as generate strong returns for investors and superannuation funds, according to Australian Private Equity and Venture Capital Association Limited (AVCAL).
New data released today by AVCAL and Cambridge Associated showed Australian private equity (PE) and venture capital (VC) funds recorded a net-of-fees return of 18.4 per cent last year, close to 16 per cent ahead of the S&P/ASX 300 Index.
AVCAL chief executive, Yasser El-Ansary, has attributed this to findings that the provision of funding is supported by PE and VC, which are linked to the success of high-growth organisations.
“High growth companies will have the greatest impact on future jobs and the Australian economy,” he said.
“The success of these companies also creates excellent returns for private equity and venture capital fund investors, such as superannuation funds.”
The Cambridge Associates LLC Australia Private Equity and Venture Capital Index (the CA Australia Index) strongly outperformed the listed markets from one-quarter to 15-years and was identified as the leading independent performance benchmark for both PE and VC.
El-Ansary noted the positivity of returns in recent times considering global markets volatility pointed to the benefits of PE and VC for investors.
“Over the past three years, PE and VC funds have on average returned over 20 per cent per annum net of fees,” he said.
“That would be an excellent record of performance at any time, but especially when the market is experiencing low returns globally. These returns underline the contribution PE and VC can make to portfolios.”
AVCAL will now turn its attention towards innovation and is set to release a list of policy priorities for the next parliamentary term, including its support for Australia’s transition to an innovative economy.
