Performance data for the private equity industry as of 30th September 2009 is now in. The results reveal that private equity performance is improving, with returns and fund valuations up from Q2 2009. Compared to public indices, private equity is still performing well over the longer term but is outperformed over the one-year period.
Preqin’s industry-leading performance data is based upon net to LP returns for 4,900 individual funds, representing 65% of all funds ever raised in terms of value. This information is gathered from multiple sources including directly from fund managers, and also from investors in funds. Preqin’s performance data can be found on the online product Performance Analyst, the industry’s most extensive and widely used source of individual fund data.
Key findings of the research include:
- While still in negative territory, performance over a one-year period to September 30th 2009 (-9.2%) represents a significant improvement compared with one-year performance to June 30th 2009 (-24.1%).
- The one-year performance of PE to September 30th 2009 (-9.2%) falls behind public markets (S&P 500 (-6.9%), MSCI Europe (-6.9%) and MSCI Emerging Markets (19.0%)).
- Over a longer time period, PE performance is more healthy – over three years returning 3.6% (beating the S&P 500 and MSCI Europe, but falling behind the MSCI Emerging Markets), and over five years returning 20.0% (beating all public indices examined here).
- By fund type, mezzanine funds have fared worst over the year to September 30th 2009, returning -17.1% over the period. Buyout funds are still in the red at -11.2%, although this represents a significant improvement from one-year figures to June 30th which were at -28.0%.
- In terms of fund net asset values, there has been a continuation in the quarter-on-quarter improvement which started in Q2 2009. There was a 6.9% increase in the weighted net asset value for all private equity funds between Q2 and Q3 2009. This goes some way in repairing the damage caused to NAVs following the onset of the financial crisis in Q3 2008.
- The very biggest funds have improved the most (after being the hardest hit when the downturn struck). The net asset value for mega buyout funds increased by 9.4% between Q2 and Q3 2009. Distressed private equity funds saw the biggest increase in NAV, up 9.6% from the previous quarter.
To access the full report, please visit:
Click www.preqin.com/Q32009PerformanceReport
Comment:
“As anticipated with the rally seen in the public markets in Q3 2009, private equity funds have seen their performance improving during Q3 2009. Short-term horizon returns remain poor, but there have been noticeable improvements in the performance of private equity funds as net asset values continued to improve compared with the previous quarter. This is an encouraging sign for the private equity industry, which was severely affected by the financial crisis and the implementation of FASB 157. ”
Etienne Paresys, Head of Research, Preqin