BVCA: Private equity continues to outperform listed peers

Ten year private equity returns have nearly doubled those of pension assets and public markets, according to a survey, with 2002 and 2004 allegedly the best vintages of the post-dotcom bubble era.

UK private equity performance continues to outpace returns posted by other assets, according to the British Private Equity and Venture Capital Association. 

In its annual performance survey, which collected data at 510 UK funds, the industry association found that the combined 10-year IRR for the group stood at 15 percent for 2012 – nearly double the 8.3 percent generated by total pension funds asset and well over the 8.8 percent posted by the FTSE All-Share index. 

The group’s five-year IRR, which mainly covers vintages raised since the financial crisis, also revealed positive figures for the asset class. Private equity funds recorded an annual return of 6 percent over the period, compared with 2.5 percent for the FTSE and 3.8 percent for pension assets. They also posted a 11.5 percent IRR for the year 2012. 

“Despite the current economic malaise, both globally and domestically, UK private equity continues to deliver great returns to investors,” commented Joe Steers, research director at the BVCA, in a statement.  

Returns since inception, at 13.9 percent, were slightly lower than those observed in 2011, albeit fairly in line with the 15 percent average posted over the last decade. The best performing vintages since after the dotcom bubble were 2002 and 2004, which respectively generated 25.5 percent and 25 percent per annum. 

Small and mid-market funds were also shown to be the best performers, clocking in more than 15 percent in both returns since inception and 10-year IRRs. 

These findings are consistent with previous surveys by the European Private Equity and Venture Capital Association, which last year showed the asset class as outperforming its comparators on five- and 10-year horizons for periods ending December 2011. The EVCA’s next performance survey, covering 2012, is due later this month.