Private equity growth funds of vintages 2006 and 2007 have produced median returns of 7.8% and 7.3% respectively, despite investing as the economic downturn hit, data from the recently launched Preqin Growth Benchmarks shows.
Growth funds of vintage 2006 outperformed their buyout counterparts, which generated a median IRR of 6.1%.
Growth funds of vintages 2006 and 2007 have called up 80% and 74.9% of capital respectively.
The difference between the best and worst performing funds’ multiples has shrunk for funds of more recent vintages; while the gap between the top and bottom quartile boundaries for funds of vintage 2005 is 1.03x, the gap for vintage 2009 funds stands at 0.27x.
Growth fund performance is highest for vintage 2005 funds, which have generated a median net IRR of 25.0%. Other private equity strategies have seen peak performance with earlier vintages.
The peak median net IRR for growth funds is higher than those of buyout, distressed debt and venture funds.
“We are delighted to release this addition to our benchmarking service as it illuminates a niche area in the private equity universe,” says Bronwyn Williams, Manager – Performance Data. “Growth funds have emerged in recent years as a distinct strategy as more fund managers are targeting minority stakes in maturing companies. Lying between venture capital and buyout in the investment cycle, growth capital is particularly prominent in Asia and offers investors an attractive way to diversify their private equity portfolios. Preqin is the sole data provider for benchmark and transparent performance information on this strategy.”
