EVCA confirms boom period for PE returns

Over the short term, the European private equity industry has delivered returns of 11.8 percent over 10 years and a one-year IRR of 33.8 percent.

The European Private Equity and Venture Capital Association (EVCA) released final performance figures for 2005 at its symposium in Monte Carlo yesterday and said that the industry has seen steadily improving returns.
 
The EVCA said that its figures, compiled by Thomson Financial, showed that, since 1980, the European private equity industry has returned 10.3 percent, net of management fees and carried interest, with buyouts and venture capital returning 13.7 percent and 6.3 percent respectively.
 
In terms of top quartile performance, buyouts returned 31.8 percent and venture funds 17.1 percent over the 26-year period.
 
The shorter-term indicators show that, over a 10-year investment horizon, returns for all private equity funds saw a modest increase to 11.4 percent in 2005 from 10.8 percent in 2004. Buyout funds registered 10-year returns of 14.3 percent, while venture funds measured 6.4 percent.
 
The one-year indicators were also positive, increasing from 17.3 percent in 2004 to 33.8 percent in 2005, with venture funds outperforming buyouts funds for the first time since 2005, with 36.5 percent and 31.7 percent respectively.
 
The latest figures reinforce the EVCA’s preliminary report in March that 2005 was a boom year for private equity. Preliminary long-term IRR figures since 1980 showed an overall return of 9.6 percent, with buyouts and venture capital funds returning 12.4 percent and 5.6 percent respectively. Over a one-year time horizon, buyout funds returned 20.9 percent and venture funds 25.4 percent.
 
The one-year return for all private equity funds for 2001 and 2002, when the private equity industry was facing far less attractive market conditions, were minus 4.5 percent and minus 9.2 percent respectively.
 
Sir David Cooksey, EVCA chairman and managing partner of Advent Venture Partners, said in a statement: “In terms of both activity and performance, 2005 was an exceptional year for the industry. Distributions were higher than the 2000 record levels and superseded capital calls by a large margin for the firm time ever. The figures indicate that momentum in European private equity and venture capital is strong and we therefore expect 2006 to be another year of strong returns for our investors.”
 
In separate news, the EVCA announced that Javier Loizaga, CEO and managing partner of Spanish private equity firm Mercapital, will replace Cooksey as association chairman for the period June 2006 to June 2007.