UK private equity and venture capital returns outperform public markets

UK private equity and venture capital funds generated 10-year returns of 14.2 per cent in 2019, outperforming the FTSE 100 and FTSE 250, according to new research from the BVCA.

The BVCA’s annual Performance Measurement Survey, produced with PwC, reports on the aggregated performance of all independent UK venture capital and private equity funds managed from the UK by BVCA members. The survey covers 117 fund managers and 813 funds. The results are presented net of fees and costs.

 
In this summary analysis, we find the 10-year return of 14.2 per cent IRR delivered by UK private equity and venture capital is significantly in excess of those generated by the public markets. Over the past decade, the FTSE All-Share returned 8.1 per cent, the FTSE 100 stands at 7.4 per cent and the FTSE 250 produced 12 per cent.

UK venture capital funds with a post-2002 vintage maintained their strong performance, producing five and 10-year IRRs of 15.1 per cent and 13.2 per cent respectively.

UK private equity also demonstrated its ability to generate consistently robust returns, with the 10-year IRRs for funds focused on small, mid and large transactions at 14.9 per cent, 12.8 per cent and 14.8 per cent respectively.

On a since-inception by vintage year basis, the survey shows that since 2008 all vintages have delivered an IRR of more than 14 per cent, with the portfolio as a whole standing at 14.6 per cent as of 31 December 2019.

The full findings of the BVCA’s Performance Measurement Survey will be published later this year, and will contain a range of other performance metrics, including fund multiples, DPI (the total amount distributed to investors as a percentage of paid-in capital) and TVPI (the total amount distributed plus the residual value attributable to investors as a percentage of paid-in capital).
 
Michael Moore, Director General, BVCA, says: “UK private equity and venture capital has a long and successful track record of producing strong returns for pension funds and other investors. These latest performance figures are further evidence of how consistently our industry outperforms the public markets, and explains why institutions at both home and abroad continue to invest in the UK.”