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14 BVCA Private Equity and Venture Capital Performance Measurement Survey 2011 Returns by investment stage – IRR and multiple Continued Fund multiples since inception The multiples show the total amount distributed to investors as a percentage of paid-in capital (DPI), and the total amount distributed plus the residual value attributable to investors as a percentage of paid-in capital (TVPI). A DPI of 93% as at December 2011, indicates that BVCA member funds (which are at least four years old) are very near to returning all of the initial capital committed for investments and fees back to their fund-investors. There is a considerable amount of residual value present within these portfolios, which will be liquidated and realised in due course. Taking account of this residual value, the total value (or TVPI multiple) yielded by these funds is 149% of the capital committed by fund-investors. Pre-1996 vintage funds Given that the majority of these funds are now fully liquidated and have been for some time, the difference between the DPI and TVPI is infinitesimal. The return of 197% indicates that for every one GBP invested in private equity and venture capital, investors received nearly twice as much in return. Generalist funds delivered the greatest DPI and TVPI followed by Large MBOs, then Mid-MBO, Development capital and finally Early Stage funds. 1996 vintage funds onwards This subset of funds contains both relatively mature funds with minimal residual values, and younger funds for whom significant unrealised value is contained in their portfolios. As such, there is a large difference between the reported DPI and TVPI. On the narrower measure of DPI, we observe that Small and, especially, Mid -MBOs are the dominant outperformers, with both generating a near 100% DPI multiple, while the much wider TVPI measure indicates all three buyout stages, across small, mid and large, generated multiples of at least 146%. In aggregate, post-1996 vintage funds delivered, on a since-inception basis to December 2011, a TVPI multiple of 146%. Since-inception return to Dec 2011 – multiple to paid-in capital (%) by investment stage and subcategory No. of funds Distributions Multiple (DPI) Total Value Multiple (TVPI) Pre-1996 vintage funds Early Stage 24 166 171 Development 35 171 171 Mid MBO 33 177 177 Large MBO 26 192 192 Generalist 35 242 243 Subtotal pre-1996 1996 vintage funds onwards 153 197 198 Venture 94 50 104 pre-2002 vintage funds 43 67 94 2002 vintage funds onwards 51 32 114 Small MBO 28 99 146 Mid MBO 118 101 146 Large MBO 40 84 149 Subtotal 1996 onwards 280 87 146 Grand total all funds Subcategories (all vintages) 433 93 149 UK 307 121 151 Non-UK 126 86 149 Pan-European 118 91 151 Technology 111 57 106 Non-Technology 322 95 151
Medium to long-term IRR by investment stage Over both the five and ten -year time horizons, UK private equity and venture capital once again yielded solid returns, of 8.0% and 14.3%, respectively. Over both timeframes, private equity performance was far superior to the returns delivered to investors in Total Pension Funds Assets and the FTSE All-Share, according to data from the WM Company. While the headline three-year return has been somewhat muted and underperformed its principal comparators, all of the underlying investment stages have made strong improvements, most notably in the Venture and Small-MBO spaces. Current year IRR Annual performance figures are highly volatile and unsuitable as a realistic measure of private equity returns. Having said that, they do present a snapshot of activity in a given 12 month window. This year, the annual IRR for the 501 funds covered in the survey was 1.1%. Pre-1996 vintage funds The point-to-point returns for the pre-1996 vintage funds are shown only in their summary form and should be interpreted with special care. As the majority of these funds have either been wound up or retain only minimal residual values, even a small number of positive exit events or write-offs can cause large swings in their short-term returns. The weight of money in this group now has little impact on the returns of the total sample. 1996 vintage funds onwards Across the ten-year time horizon, robust performance was noted over all three of the buyout stages with Small MBO being the dominant outperformer – generating IRRs of 20.9% p.a. – and Mid and Large MBOs both generating returns near the fifteen per cent mark. The Small MBO stage was also the notable outperformer across medium to long-term time period. Equally encouraging are the returns generated from venture funds when this year’s performance of 1.7% IRR per annum for both the last three and five years is compared to the corresponding numbers from the preceding surveys. Subcategories (all vintages) Over both the five and ten -year time frames, the noteworthy outperformers are the Non-UK, Pan-European and non-tech focused funds. While over the short-term, UK private equity underperforms its principal comparators, over the five and ten-year time frame, all private equity subcategories other than non-tech consistently outperform both the FTSE All-Share and the Total Pension Fund universe. BVCA Private Equity and Venture Capital Performance Measurement Survey 2011 15 Current year and longer term returns – IRR (% p.a.) by investment stage and subcategory No. of funds 2011 Three years Five years Ten years Pre-1996 vintage funds* 1996 vintage funds onwards 153 -3.4 -0.5 70.2 16.0 Venture 115 4.5 1.7 1.7 -0.7 pre-2002 vintage funds 43 1.9 -2.7 -2.3 -3.6 2002 vintage funds onwards 72 5.5 4.2 4.6 n/a Small MBO 47 0.0 17.9 14.8 20.9 Mid MBO 140 5.5 4.5 9.8 14.7 Large MBO 46 -0.1 10.0 7.9 15.8 Subtotal 1996 onwards 348 1.1 8.6 8.0 14.3 Grand total all funds Subcategories (all vintages) 501 1.1 8.6 8.0 14.3 UK 348 8.0 4.8 6.1 11.0 Non-UK 153 0.3 9.0 8.3 15.2 Pan-European 145 0.6 8.6 8.4 15.9 Technology 130 3.1 1.2 1.7 -0.8 Non-Technology 371 1.0 8.9 8.4 15.4 Listed Private Equity** 22 -6.4 8.7 1.5 6.0 * The time period returns for the pre-1996 vintage funds are shown only in their summary form and should be interpreted with special care. As the majority of these funds have either been wound up or retain only minimal residual values, a small number of positive exit events or write-offs can cause large swings in their short term returns. The weight of money in this group now has little impact on the returns of the total sample. ** Annualised weighted average total net asset value return, calculated by Morningstar, www.morningstar.com
Page 1 and 2: BVCA Private Equity and Venture Cap
Page 3 and 4: Contents Overall performance Forewo
Page 5 and 6: Highlights In the midst of continue
Page 7 and 8: While post 1996-vintage venture fun
Page 9 and 10: Across all vintage years, BVCA fund
Page 11 and 12: Since-inception IRR (%) - venture f
Page 13 and 14: marketplace for private equity fund
Page 15: Since-inception return - IRR (% p.a
Page 19 and 20: Since-inception return to Dec 2011
Page 21 and 22: Since-inception return to Dec 2011
Page 23 and 24: Range of returns (IRR and multiple)
Page 25 and 26: Range of returns (multiple) by inve
Page 29 and 30: Range of returns (IRR and multiple)
Page 33 and 34: By vintage year to year end Decembe
Page 35 and 36: Appendix I - Methodology The Survey
Page 37 and 38: Appendix II - Glossary of terms Cap
Page 43 and 44: Appendix IV - Range of returns (IRR
Page 47 and 48: 1994 to 1996 vintage funds Subtotal
Page 49 and 50: 1996 to 1998 vintage funds BVCA Pri
Page 55 and 56: The NAV required to produce the pre
Page 57 and 58: Loudwater Investment Partners Ltd L
Page 59 and 60: Does this allow for greater breakdo
Page 63 and 64: Disclaimer The data within this rep

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