BVCA Private Equity and Venture Capital ... - BVCA admin

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