Study: European PE and VC outperforms other regions

Euro-denominated European private equity and venture capital funds recorded an internal rate of return of 8.3 percent for the first quarter.  

Euro-denominated European private equity and venture capital funds recorded an internal rate of return of 8.3 percent for the first quarter.

European private equity and venture capital funds with returns calculated in euros performed better than Asia Pacific and US and Canadian PE and VC funds for the first quarter of 2015, according to the ILPA Private Markets Benchmark.

Euro-denominated European private equity and venture capital funds recorded an internal rate of return of 8.3 percent for the first quarter, while the same funds denominated in dollars returned -3.9 percent. Asia Pacific PE and VC that generated a combined IRR of 5.2 percent. US and Canadian private equity investment funds returned 2.6 percent over the same period, while venture funds returned 3.69 percent.

The research, which is a joint project between the Institutional Limited Partners Association and Cambridge Associates, analysed the pooled internal rates of return for 3,254 private investment funds.

When it came to ten year returns as of 31 March, the disparity in fund performance for different geographies narrowed. Euro-denominated European private equity and venture capital funds reported an IRR of 14.2 percent, while US and Canadian private equity funds generated an IRR of 12.8 percent and VC funds 10.83 percent. Combined Asia Pacific private equity and venture generated 14.1 percent over 10 years.

Once the European private equity and venture capital fund returns were converted into dollars, performance dipped. Over five years the same funds generated an IRR of 10.5 percent, compared to 14.8% for fund returns calculated in euros. Dollar-denominated IRR was 11.8 percent over 10 years, according to the research.

Fund of funds generated a 1 percent return over the quarter compared to an IRR of 12.7 percent for one year, and 9.9 percent over ten years.