The combined 10 year internal rate of return (IRR) for private equity and venture capital stood at 14.9 per cent for 2014, nearly double the figure returned by UK pension fund assets (7.8 per cent) and the FTSE All-Share (7.6 per cent).
That’s according to the BVCA’s annual Performance Measurement Survey examines the performance of UK private equity and venture capital funds and how they compare against other asset classes.
The survey, produced in association with PwC and Capital Dynamics, finds that venture capital funds in particular have had a successful year, with 2014 marking both the highest performance for all venture funds since the financial crisis, and the first time that since-inception returns for pre-2002 funds have been positive since the BVCA began measuring their performance.
Since-inception performance of all funds recorded an IRR of 13.8 per cent, remaining strong and well within the typical range of returns for the industry.
The five year IRR for all funds covered in this survey was 11.5 per cent. This compares with the returns generated by total UK pension fund assets of 9.4 per cent and FTSE All-Share of 8.7 per cent.
Pre-2002 venture capital fund vintages obtained an IRR of 34.2 per cent in 2014 and the asset class as a whole reached an annual IRR of 14.6 per cent.
Small MBOs have remained strong says: “Private equity has had its downs as well as ups over the last ten years, and returns from different years tell their different stories. Taking the decade as a whole though, PE has shown real resilience in comfortably outperforming pension assets and the listed sector. More recent, post-crisis vintages have performed well and successful exits over the last few years have shown how the industry can respond to a downturn, which is encouraging for investors.”
