1. Executive Summary The 2014 Preqin Private Equity Performance Monitor
Transcription
1. Executive Summary The 2014 Preqin Private Equity Performance Monitor
Executive Summary - Sample Pages 1 2,000 Unrealized Portfolio Value ($bn) Dec-13 Dec-12 Dec-11 Dec-10 Dec-09 Dec-08 Dec-07 Dec-06 Dec-05 Dec-04 Dec-03 0 Dec-02 500 Dec-01 1,000 2,546 2,332 2,029 563 1,783 409 1,265 1,413 298 377 407 402 898 1,204 675 418 374 360 465 554 Dec-00 1,500 Dry Powder ($bn) 1,067 1,011 1,075 806 Fig. 1.2: All Private Equity - Annual Amount Called-Up, Distributed and Unrealized Value 500 0 2013 100 2012 1,000 2011 200 2010 1,500 2009 300 2008 2,000 2007 400 2006 2,500 2005 500 2004 3,000 2003 600 2002 Secondaries funds emerge as the best performing fund type, with the highest median net IRR and a relatively low risk measure. The private equity secondary 941 1,007 993 2,500 Risk and Return Also revealed in the 2014 Private Equity Performance Monitor is Preqin’s latest analysis of risk-return trade-offs, broken out by geographic focus, fund strategy and vintage year. By plotting the median against the standard deviation of net IRRs, we are able to examine which fund types have the most attractive risk-return profile. As explained in Chapter 12, and seen in Fig. 1.3, a significant range is displayed across both axes for the different private equity investment strategies. Though there are risks inherent in any illiquid market such as private equity, the level of risk between the different fund types varies by some margin. 1,174 3,000 Unrealized Value ($bn) As confirmed in Preqin’s latest Investor Outlook survey, LPs are still looking to increase their allocations to private equity, and as upticks are seen in annual fundraising figures, the industry’s assets under management (AUM) have continued to climb ever higher. In fact, since the turn of the millennium, the private equity industry’s AUM have risen year on year, and have attained the highest figure to date of $3.7tn as of 31 December 2013. Preqin calculates AUM by adding the uncalled capital commitments (dry powder) to the unrealized value of portfolio assets, as displayed in Fig. 1.1, which illustrates the steady incremental increases in unrealized portfolio value each year, and the record amount of private equity dry powder available as of December 2013. 3,500 2001 In last year’s Preqin Private Equity Performance Monitor, we acknowledged the economic turmoil that was endured by the industry following the crash of 2008, the onset of the European sovereign debt crisis, and the fluctuations around these events. All-in-all, the progress of the private equity market since the downturn six years ago has been encouraging, reflected in the ever increasing amounts of capital investors around the world commit to the asset class. Furthermore, and perhaps most notably for investors, performance data shows that distributions have increased considerably over the past year, from $381bn in 2012 to $568bn in 2013, making it the highest level of capital LPs have ever received back from their private equity investments in a year. Fig. 1.2 displays the new peak, and more trends in private equity dry powder and AUM are discussed in Chapter 11. Annual Amount Called/Distributed ($bn) Record Highs 4,000 2000 1. Executive Summary Fig. 1.1: All Private Equity - Assets Under Management, 2000 - 2013 Assets under Management ($bn) The 2014 Preqin Private Equity Performance Monitor Capital Called ($bn) Capital Distributed ($bn) Unrealized Value ($bn) 0 © 2014 Preqin Ltd Executive Summary - Sample Pages 2 Preqin’s tables of consistent performing managers, featured in the 2014 Preqin Private Equity Performance Monitor, can help with this task. Each fund that Preqin has performance data for is assigned a quartile ranking using Preqin’s Performance Analyst online service, which contains performance data for over 7,000 private equity funds worldwide. These rankings are based upon the peer group of each vehicle and take into account vintage year, strategy and geographic focus. Both the multiple and IRR are used as key indicators and equal emphasis is placed on both metrics. Risk - Standard Deviation of Net IRR (%) Balanced Buyout 20% Distressed Private Equity Fund of Funds Growth 15% Infrastructure Mezzanine 10% Natural Resources Real Estate Secondaries 5% Venture Capital Early Stage 0% 0% 5% 10% 15% 20% Return - Median Net IRR (%) Fig. 1.4: Rolling One-Year Horizon IRRs by Fund Type 30% 25% All Private Equity 20% Buyout 15% 10% Venture Capital 1 Year to Dec 2013 1 Year to Sep 2013 1 Year to Jun 2013 1 Year to Mar 2013 1 Year to Dec 2012 1 Year to Sep 2012 1 Year to Jun 2012 1 Year to Mar 2012 0% 1 Year to Dec 2011 Fig 1.5 shows a list of the top six consistent performing buyout fund managers and their average quartile rank. Funds ranked in the top quartile are given a score of one, funds in the second quartile are scored a two, and so on. The table is compiled using only funds for which Preqin holds performance 1 Year to Sep 2011 5% 1 Year to Jun 2011 2013 saw an uptick in venture capital performance as a whole. Fig. 1.4 depicts the rolling one-year horizon IRRs for the whole private equity industry, as well as buyout and venture capital. Venture capital outperforms its buyout counterparts and the whole private equity asset class with a return of 19.7% in one year to December 2013. The importance of finding consistent performing fund managers is crucial for any investor that wants maximum reassurance that their fund commitment will be in safe hands. Though past performance is no guarantee of future returns, data such as the performance metrics available on Preqin’s Performance Analyst are highly valuable tools to help benchmark funds and inform LP decisions. 25% 1 Year to Mar 2011 On the other side of the spectrum, we find early stage funds with a much less attractive risk-return profile. However, the high standard deviation in the chart highlights the wide range of net IRRs that can be attained, and therefore suggests that early stage funds still offer the potential of hitting a lucrative ‘home run’ investment. Consistent Performers Fig. 1.3: Risk and Return by Strategy (Vintage 2001 - 2011) 1 Year to Dec 2010 Highs and Lows of Venture Capital Performance The increase from previous quarters can be linked to the improved exit opportunities and high valuations in recent times. Horizon IRR market has gone from strength to strength, breaking records for fundraising and transaction volume year on year. The growth and maturation of the secondary market has been tracked by Preqin over time, as has the increasing number of investors that have expressed an interest in buying or selling fund stakes in order to reap a range of benefits. For sellers, this includes meeting liquidity requirements, portfolio rebalancing, and the opportunity to exit poor performing funds. For buyers, secondary market purchases will help mitigate the J-curve effect inherent in private equity commitments, and provide access to top performing managers and chances to acquire fund stakes at a good discount to NAV. © 2014 Preqin Ltd Executive Summary - Sample Pages data and has assigned a quartile ranking. Additionally, 2012, 2013 and 2014 vintage funds have been excluded as these funds are too early in their fund lives to generate meaningful IRRs. The list only includes fund managers that have raised at least three funds of a similar strategy. Four buyout fund managers, Rhone Capital, Altor, Wynnchurch Capital Partners and Trilantic Capital Partners have all of their funds ranked in the top quartile, and therefore have achieved the best possible average quartile rank of 1.00. Morgan Stanley Global Private Equity and Waterland follow, each with a score of 1.20. Extended lists of consistent performing fund managers, broken out into various fund types, are available in Chapter 3 of the Performance Monitor. The 2014 Preqin Private Equity Performance Monitor We are proud to be launching the eleventh edition of the Performance Monitor, celebrating over a decade of providing net-to-LP returns data to the private equity community. This edition contains key metrics for over 7,000 funds, representing 70% of the total capital raised by the industry. Additionally, multiple sources are used to ensure accuracy. We hope that you find this year’s edition of the Performance Monitor to be a useful and effective tool and, as ever, welcome any feedback that you may have. This edition of the Performance Monitor features the PrEQIn Private Equity Quarterly Index, regional performance of private equity funds, and 10-year horizon IRRs, as well as analysis of private equity performance by fund type, size and region. In addition, the Monitor explores the effects of past performance on private equity fundraising, performance benchmarks for the different fund types, regions and vintage years, as well as an analysis of listed private equity performance, synthetic IRRs for private equity funds of funds, dry powder and assets under management, and more. Preqin gathers its performance information directly from both fund managers and investors, ensuring that the full spectrum of private equity fund performance is observed, be it positive or negative. Fig. 1.5: Top Six Consistent Performing Buyout Fund Managers Firm Location Overall Number of Funds with Quartile Ranking Number of Funds in Top Quartile Number of Funds in Second Quartile Average Quartile Rank US 3 3 0 1.00 Sweden 3 3 0 1.00 Wynnchurch Capital Partners US 3 3 0 1.00 Trilantic Capital Partners US 3 3 0 1.00 Morgan Stanley Global Private Equity US 5 4 1 1.20 Netherlands 5 4 1 1.20 Rhone Capital Altor Waterland 3 © 2014 Preqin Ltd The 2014 Preqin Private Equity Performance Monitor A comprehensive guide to private equity performance Contents - Sample Pages Contents 1. Executive Summary 5 2. Methodology 9 3. Consistent Performing Fund Managers 13 12. Top Performing Funds 13. PrEQIn - Private Equity Quarterly Index 19 14. Effects of Past Performance on Private Equity Fundraising 43 47 Effect of predecessor fund performance on time spent on road by funds closed in 2012/13; effect of predecessor fund performance on subsequent fundraise vs. initial fundraising target; effect of predecessor fund performance on time spent on the road for funds currently in market. 7. Performance Data in a Global Context 15. How Much Have Investors Gained Historically? Private Equity Horizon IRRs 95 17. Overall Performance of Private Equity 59 99 101 Called-up capital, distributed capital and residual value; median net IRRs and quartile boundaries; money-weighted and pooled IRRs; IRRs by geographic focus; fund IRR deviations from benchmark; cash flows; J-curves; relationship between quartile ranking and manager experience; relationship between predecessor and successor fund quartiles. 55 18. Buyout 105 Called-up capital, distributed capital and residual value; median net IRRs and quartile boundaries; money-weighted and pooled IRRs; IRRs by fund size; fund IRR deviations from benchmark; cash flows; J-curves; relationship between predecessor and successor fund quartiles; fund performance listings. 63 Annual change in NAV; quarterly change in NAV for all private equity and buyout by fund size; quarterly change in NAV by fund type; capital appreciation/depreciation of NAV during 2013. 11. Dry Powder and Assets under Management Data Coverage Explanation of ratios and data used in the graphs. One-, three-, five- and 10-year horizon IRRs as of 31 December 2013; private equity horizon IRRs vs. public indices; buyout fund horizon IRRs by size; regional IRRs; rolling one-year and three-year horizon IRRs by fund type. 10. Change in Fund Valuations 77 16. How to Interpret Performance Ratios for Private Equity Funds 49 Net LP gain by vintage year; horizon returns by asset class of public pension funds; one-year returns to December 2013; private equity vs. total investment portfolio and listed equity. 9. Market Benchmarks Fund universe; Preqin performance coverage by type and region. North America-focused funds; Europe-focused funds; Asia-focused funds; Africa-, Latin America and Caribbean-, Australasia- and Middle East and Israel-focused funds. 8. 75 All Private Equity: All Regions; North America; Europe; Asia. Buyout: All Regions; North America; Europe; by fund size Fund of Funds Mezzanine Infrastructure Distressed Private Equity Growth Real Estate Venture Capital: All Regions; North America; Europe; Early Stage Secondaries PrEQIn Quarterly Private Equity Index: all strategies; buyout by fund size; venture capital by investment stage; fund quartile indices. 6. Performance of Listed Private Equity Overview of listed private equity; share prices; discounts and premiums to net asset value; performance listings. Rankings of top performing funds by fund type and vintage year. 5. 71 Risk and return by fund strategy; IRR deviation from benchmark; risk and return for buyout, distressed private equity, real estate, venture capital, fund of funds and secondaries. Buyout, venture capital, fund of funds, real estate and other fund managers that have consistently produced top quartile returns. 4. Risk and Investment Selection 67 19. Distressed Private Equity 147 Called-up capital, distributed capital and residual value; median net IRRs and quartile boundaries; IRR dispersion; distributions to paidin capital ratios – median and quartile boundaries; residual value to paid-in capital ratios – median and quartile boundaries; fund performance listings. Private equity assets under management; dry powder by region focus; buyout dry powder by fund size; venture capital dry powder by investment stage; annual amount called, distributed and unrealized value. 5 © 2014 Preqin Ltd Contents - Sample Pages 20. Fund of Funds 157 Called-up capital, distributed capital and residual value; median net IRRs and quartile boundaries; fund IRR deviations from benchmark; cash flows; J-curves; relationship between predecessor and successor fund quartiles; fund performance listings; synthetic IRRs for private equity funds of funds of different allocation mixes. 21. Growth 183 Called-up capital, distributed capital and residual value; median net IRRs and quartile boundaries; median multiples and quartile boundaries; IRR dispersion; money-weighted IRRs; fund performance listings. 22. Infrastructure 193 Called-up capital, distributed capital and residual value; minimum, median and maximum IRRs; median multiples and quartile boundaries; fund performance listings. 23. Mezzanine 201 Called-up capital, distributed capital and residual value; median net IRRs and quartile boundaries; fund IRR deviations from benchmark; cash flows; IRR dispersion; fund performance listings. 24. Real Estate 211 Called-up capital, distributed capital and residual value; median net IRRs and quartile boundaries; IRR dispersion; fund IRR deviations from benchmark; value added vs. opportunistic multiples; cash flows; relationship between quartile ranking and manager experience; relationship between predecessor and successor fund quartiles; fund performance listings. 25. Secondaries 249 Called-up capital, distributed capital and residual value; median net IRRs and quartile boundaries; money-weighted IRRs; cash flows; IRR dispersion; fund performance listings. 26. Venture Capital 255 Called-up capital, distributed capital and residual value; median net IRRs and quartile boundaries; money-weighted and pooled IRRs; early stage vs. other venture IRRs; healthcare vs. IT IRRs; fund IRR deviations from benchmark; cash flows; J-curves; relationship between quartile ranking and manager experience; relationship between predecessor and successor fund quartiles; fund performance listings. 27. Other Fund Types Performance Listings 307 Balanced; co-investment; co-investment multi-manager; direct secondaries; natural resources; timber 28. Index 321 Firm Index Figure Index 6 29. Glossary 349 30. Performance Analyst Online 351 © 2014 Preqin Ltd Methodology - Sample Pages 2. Methodology The content of the 2014 Preqin Private Equity Performance Monitor is focused on the performance of private equity funds available to institutional investors, and as a result, excludes direct investments in unlisted corporate securities. The fund-level performance data and all related analysis herewith is taken from Performance Analyst, our online service and the world’s most extensive and transparent source of private equity performance. Launched in 2003, Performance Analyst initially held data for 1,086 funds. This figure has since grown substantially, and at present, Performance Analyst holds fundlevel data for over 7,000 funds, representing a 7.2% increase from the previous year. In terms of total capital raised, Performance Analyst contains data for over 70% of all funds raised historically. Subscribers to Performance Analyst will be able to view all of the data contained within the Monitor online, in addition to obtaining fund level performance data updated on a regular basis. Further information can be found at: www.preqin.com/pa. Preqin reports fund-level performance data which is representative of the investor’s experience. Therefore, all the figures presented within the Monitor show the net position to the investor, and all returns 7 information is based on the institutional investor’s position before tax, but after the GP’s managed and carried fees have been deducted. Performance figures held by Preqin are obtained from various sources and via varying means. The majority of performance figures are attributed to institutional investors and are obtained via Freedom of Information Act (FOIA) requests; these requests include CalPERS, Washington State Investment Board, and Florida State Board of Administration among many others both in the US and the UK. We currently have approximately 350 (active and web-based) public pension funds and endowments that are contributing performance figures to Preqin. In addition to obtaining performance figures via FOIA requests, Preqin also receives performance data directly from GPs themselves. As a significant proportion of our online subscribers consist of prospective investors viewing performance figures on a fund level, GPs inevitably recognize the importance of providing the most accurate and the most recent data, consistent with our net-to-LP performance metrics definitions, to ensure the funds are represented both accurately and in line with our methodologies. Our wide range of data sources and our extensive research program allows us to verify data for funds on an individual basis, ensuring a high level of confidence in the accuracy of the data held. Preqin greatly appreciates GPs contributing fund performance data: therefore we are happy to offer those GPs complimentary access to our Performance Benchmark module within Performance Analyst, in addition to discounted access to the full version of Performance Analyst. Should you require further information, or wish to contribute performance data, please contact us at [email protected] or visit our website at www.preqin.com/pa. Preqin acknowledges the importance of GP feedback on each fund. Hence, prior to the release of the Monitor, GPs were invited to comment and amend their individual fund performance, ensuring that the data included within this publication is accurate and up to date. This process took place during June 2014, though we are still happy to receive any additional feedback, and this will be incorporated onto our database once received. The dates to which the performance figures relate are provided in the fund listings and are an important consideration for the readers to ensure the data is correctly interpreted. The Monitor shows the most up-to-date information at the time of going to press in July 2014. The majority of the data presented in this book is as of the fourth quarter of 2013 or the first quarter of 2014. On occasion, data that is older than this will be included and will mostly relate to funds with more mature vintages that have already distributed the majority of the capital back to investors and hence the data is not expected to change significantly. In order to ensure the most appropriate fund-level comparisons are conducted, percentages have been used to represent all performance metrics. The following chart gives a representation of performance metrics displayed in the fund listings section of the Monitor. ‘Called percentage’ refers to the ratio of capital called at the specified date against the total amount committed to the fund. ‘Distributed to paid-in capital (DPI)’ refers to the amount received by the investors as a percentage of the paid-in capital to date. The ‘residual value to paidin capital (RVPI)’ percentage measures the remaining value of the portfolio expressed as a percentage of paid-in capital to date. The multiple is the sum of the distribution and the remaining value figures, expressed as a times factor of the total capital called to date. Finally, Preqin defines the vintage year as the year in which the first investment was © 2014 Preqin Ltd Methodology - Sample Pages made from the fund using LP capital (i.e. the year of the first capital call to LPs for investment). Preqin generates benchmarks for all the main performance metrics - called, DPI, RVPI, multiple and IRR - using the median, average, pooled or money-weighted value. However, due to the space limitation within the Monitor, the Monitor only displays the median IRR benchmark figures. All benchmark figures generated by Preqin are available to subscribers of Performance Analyst, in addition to the feature of creating custom benchmarks from their individual user-defined fund universe. Preqin benchmark data is transparent and allows subscribers to view the constituent funds. debt, special situations, turnaround, real estate, infrastructure, natural resources, balanced, secondaries funds and funds of funds. Additional notes regarding our terminologies and methodologies can be found in Chapter 29: Glossary, or on our website at www.preqin.com, and should readers of the Monitor have any further questions, they are most welcome to contact us. Preqin Ltd. July 2014 Additionally, Preqin generates quartile rankings for individual funds. Each fund universe constitutes funds with similar fund types, geographies and vintage years, enabling the quartile rankings to be assigned using a combination of both the IRR and multiple rankings of each constituent fund, with equal weights being placed on each the IRR and multiple. In instances where the sample size is small, the funds are assigned quartile rankings which are generated against the private equity industry in its entirety. The 2014 Preqin Private Equity Performance Monitor aims to conduct analysis and provide insight into all private equity types from many different geographic regions. Preqin uses the term “private equity” to denote a variety of fund types: buyout, venture capital, mezzanine, distressed 8 © 2014 Preqin Ltd Methodology - Sample Pages 1. Called (%): 6. Benchmark IRR (%): Percentage of LP’s commitment contributed to date. The median IRR for the relevant peer group. We have specific benchmarks for buyout, venture capital, early stage, fund of funds, real estate and mezzanine funds. Funds of a different type are benchmarked against “All Private Equity”. e.g. an LP with a $1mn commitment will have paid in $900,000 to date. e.g. in this case vintage 2008 North America buyout funds. 10. Fund Specifics: 2. Distributed (%) DPI: 8. As at: Fund size is the total commitment received by the fund. Vintage and region focus are used for benchmarking. Distributions received to date as a percentage of called capital. This is the ‘as at date’ for the valuations and performance. e.g. in this case, the benchmark is 2008 US buyout funds e.g. an LP with a $1mn commitment has received $292,500 – this is 32.5% of the $900,000 called. e.g. in this case the data is valid as of 31 Dec 2013. Firm name Fund Vintage Size (mn) Location Focus Called (%) Distributed (%) DPI Res. Value (%) RVPI Net Multiple (X) Net IRR (%) Benchmark IRR (%) Quartile As at: Mega Capital Partners Mega Fund I 2008 100 USD North America 90.0 32.5 105.1 1.38 8.0 8.0 2 31-Dec-13 Mega Fund II 2009 50 USD North America 60.0 29.7 52.7 0.82 -6.5 4.0 4 31-Dec-13 Example Capital Partners Example Fund I 2005 500 USD Europe 100.0 219.0 36.3 2.55 46.4 28.1 1 31-Dec-13 Example Fund II 2007 700 USD Europe 90.0 13.9 112.4 1.26 10.3 10.3 3 31-Dec-13 7. Quartile: 3. Residual Value (%) RVPI: 9. Firm Name/Fund: The name of the fund manager and their corresponding fund. Valuation of unrealized investments as percentage of called capital. This shows which quartile of the relevant peer group the fund falls into. We put equal weight on the IRR and value multiple. e.g. an LP with a $1mn commitment has unrealized investment valued at $945,900 – which is 105.1% of the $900,000 called. e.g. Mega Fund I is a second quartile fund. 4. Net Multiple (X): 5. Net IRR (%): Distributions plus unrealized value. The net IRR earned by the LP to date after fees and carry. e.g. in this case 1.38 – which is (35.5%+105.4%) / 100 9 e.g. in this case 8.0%, counting both distributions and unrealized value. © 2014 Preqin Ltd Top Performing Funds - Sample Pages Top Performing North American Funds Fig. 4.39: Top 10 Best Performing North American Private Equity Funds Rank Fund Firm Vintage Fund Size (mn) Type Region Focus Called (%) Distributed (%) DPI Value (%) RVPI Multiple (X) Net IRR (%) Date Reported 1986.2 0.0 19.86 514.3 30-Jun-14 1 Matrix Partners V Matrix Partners 1998 200 USD Venture Capital North America 100.0 2 Benchmark Capital Partners II Benchmark Capital 1997 125 USD Venture Capital North America 100.0 723.6 0.0 7.24 267.8 30-Jun-14 3 Matrix Partners IV Matrix Partners 1995 125 USD Venture Capital North America 100.0 2051.1 0.0 20.51 218.3 30-Jun-14 4 Focus Ventures I Focus Ventures 1997 106 USD Venture Capital North America 100.0 539.2 0.0 5.39 213.0 30-Jun-14 5 Mayfield IX Mayfield Fund 1997 252 USD Early Stage North America 100.0 653.7 8.8 6.62 195.7 30-Sep-13 6 Accel V Accel Partners 1996 150 USD Venture Capital North America 100.0 1962.0 0.0 19.62 188.4 30-Jun-14 7 Battery Ventures IV Battery Ventures 1997 200 USD Venture Capital North America 100.0 715.3 0.0 7.15 160.3 30-Jun-14 8 Quantum Energy Partners II Quantum Energy Partners 2000 225 USD Natural Resources North America 72.4 521.8 0.2 5.22 138.0 31-Dec-13 9 Menlo Ventures VII Menlo Ventures 1997 253 USD Venture Capital North America 100.0 471.0 0.0 4.71 135.6 30-Jun-14 WPG Venture Associates IV Lightspeed Venture Partners 1997 212 USD Early Stage North America 100.0 390.2 3.5 3.94 123.0 31-Dec-13 10 Funds to Watch Fig. 4.40: Top Five Best Performing Buyout Funds (Vintage 2012 - 2014) Rank Fund 10 Firm Vintage Fund Size (mn) Type Region Focus Called (%) Distributed (%) DPI Value (%) RVPI Multiple (X) Net IRR (%) Date Reported 1 Thoma Bravo Fund X Thoma Bravo 2012 1,275 USD Buyout North America 87.1 62.7 81.1 1.44 n/m 31-Mar-14 2 Platinum Equity Capital Partners Fund III Platinum Equity 2012 3,750 USD Buyout North America 21.9 42.4 94.9 1.37 n/m 31-Dec-13 3 Ridgemont Equity Partners Fund I Ridgemont Equity Partners 2012 735 USD Buyout North America 43.5 13.8 121.8 1.36 n/m 31-Dec-13 4 Aquiline Financial Services Fund II Aquiline Capital Partners 2012 743 USD Buyout North America 65.8 2.8 129.0 1.32 n/m 31-Mar-14 5 MBK Partners III MBK Partners 2013 2,670 USD Buyout Asia 23.1 0.0 130.5 1.30 n/m 31-Dec-13 © 2014 Preqin Ltd PrEQIn - Private Equity Quarterly Index - Sample Pages The PrEQIn Private Equity Quarterly Index draws on information taken from Preqin’s Performance Analyst. It is a moneyweighted index that uses fund-level cash flow transactions and net asset values for over 7,500 individual private equity partnerships - these funds have raised over $4.1tn in aggregate capital. The Index is created using the following calculation: Percentage change in quarter = [(NAV at end of quarter + distributions during quarter)/(NAV at start of quarter + call-ups during quarter)] – 1. These returns are then combined to form an index with the starting value of 100 as of 31 December 2000. In addition to an overall private equity index, we have calculated 11 PrEQIn Buyout Index PrEQIn Venture Capital Index PrEQIn Real Estate Index PrEQIn Fund of Funds Index PrEQIn Distressed Private Equity Index S&P 500 Index 400 350 300 250 200 150 100 50 0 PrEQIn Private Equity Quarterly Index: All Strategies Fig. 5.1 shows the PrEQIn All Private Equity, Buyout, Venture Capital, Real Estate, Fund of Funds and Distressed Private Equity Indices together with the S&P 500 rebased to 100 as of 31 December 2000. Examining these indices provides an insight into the performance of the main private equity fund types in comparison to each other, the industry as a whole, and public markets. The PrEQIn All Private Equity Index shows an initial decline following the dot-com crash in the early 2000s. The performance of the industry subsequently improved until December 2007, when the industry experienced a decrease in performance that continued through subsequent quarters. This resulted from the financial crisis as well as the introduction of mark-to-market valuations during this time. After Q1 2009, PrEQIn All Private Equity Index 450 31-Dec-00 30-Jun-01 31-Dec-01 30-Jun-02 31-Dec-02 30-Jun-03 31-Dec-03 30-Jun-04 31-Dec-04 30-Jun-05 31-Dec-05 30-Jun-06 31-Dec-06 30-Jun-07 31-Dec-07 30-Jun-08 31-Dec-08 30-Jun-09 31-Dec-09 30-Jun-10 31-Dec-10 30-Jun-11 31-Dec-11 30-Jun-12 31-Dec-12 30-Jun-13 31-Dec-13 indices for the main private equity fund strategies as well as buyout by fund size, venture capital by investment stage and private equity by performance quartile ranking, allowing investors to analyze and compare different parts of their private equity portfolios. At this time, the figures for Q2 2013 are finalized; however, Q3 2013 and Q4 2013 figures are preliminary and subject to change. Fig. 5.2: PrEQIn Private Equity Index: All Private Equity, Buyout and Venture Capital vs. S&P 500 Index Returns (Rebased to 100 as of 31-Dec-2007) Assessing the performance of an investment portfolio is an important and challenging task for an investor, and many different metrics are required when constructing and maintaining an effective private equity program. The PrEQIn Private Equity Quarterly Index is the first index covering the whole private equity industry, enabling investors to compare the returns from their private equity portfolios to those of other asset classes. 500 160 140 PrEQIn All Private Equity Index 120 100 PrEQIn Buyout Index 80 60 PrEQIn Venture Capital Index 40 S&P 500 20 0 31-Dec-07 31-Mar-08 30-Jun-08 30-Sep-08 31-Dec-08 31-Mar-09 30-Jun-09 30-Sep-09 31-Dec-09 31-Mar-10 30-Jun-10 30-Sep-10 31-Dec-10 31-Mar-11 30-Jun-11 30-Sep-11 31-Dec-11 31-Mar-12 30-Jun-12 30-Sep-12 31-Dec-12 31-Mar-13 30-Jun-13 30-Sep-13 31-Dec-13 Index Fig. 5.1: PrEQIn Index: All Strategies Index Returns (Rebased to 100 as at 31-Dec-2000) 5. PrEQIn – Private Equity Quarterly © 2014 Preqin Ltd Market Benchmarks - Sample Pages 14. Market Benchmarks Fund Type: All Private Equity Vintage 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 12 No. of Funds 160 182 255 190 161 341 378 351 298 169 144 134 174 263 173 178 161 113 103 89 82 65 40 64 70 47 42 37 35 27 21 15 6 9 Geographic Focus: All Regions Called (%) 12.7 30.0 47.4 71.2 82.0 86.6 91.3 94.7 97.3 98.9 99.1 100.0 100.0 99.1 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Median Fund Dist (%) DPI 0.0 0.0 3.6 14.4 24.3 30.0 38.5 49.4 72.1 100.0 129.6 132.0 149.0 133.0 140.6 143.2 159.3 165.0 186.8 188.3 232.4 176.8 222.4 207.6 227.2 221.1 210.2 193.7 218.6 216.0 175.5 191.3 150.3 234.6 Benchmark Type: Median Multiple Quartiles (X) Value (%) RVPI 94.9 100.8 104.5 104.0 100.0 93.6 86.3 75.3 54.7 40.0 27.4 14.4 11.0 9.2 0.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 As at: 31 December 2013 IRR Quartiles (%) IRR Max/Min (%) Q1 Median Q3 Q1 Median Q3 Max Min 1.03 1.19 1.27 1.42 1.55 1.48 1.51 1.50 1.62 1.74 1.93 2.04 2.15 2.00 1.83 1.90 2.33 2.19 2.48 2.59 3.40 2.54 3.01 2.56 3.26 3.11 3.30 2.47 3.00 2.93 2.89 3.06 n/m 3.85 0.96 1.07 1.13 1.27 1.33 1.31 1.33 1.30 1.35 1.44 1.57 1.58 1.61 1.46 1.42 1.45 1.63 1.67 1.87 1.88 2.32 1.77 2.23 2.08 2.27 2.21 2.10 1.94 2.19 2.16 1.76 1.91 1.50 2.35 0.84 0.95 1.02 1.12 1.15 1.14 1.12 1.08 1.03 1.08 1.30 1.26 1.29 1.01 0.92 1.10 1.22 1.26 1.38 1.35 1.53 1.34 1.74 1.42 1.55 1.78 1.36 1.43 1.51 1.58 1.53 1.70 n/m 1.80 n/m n/m n/m 19.0 20.0 16.3 12.7 10.1 12.6 15.0 21.6 26.0 25.1 19.2 15.4 17.1 24.1 25.5 29.2 36.5 42.7 28.7 33.0 25.3 30.5 30.1 20.3 16.2 17.8 14.7 25.4 15.8 n/m 22.4 n/m n/m n/m 13.3 13.6 11.2 8.4 6.9 7.4 8.7 12.8 12.7 13.0 10.4 9.2 9.7 12.8 13.2 17.9 18.3 21.7 18.6 23.4 16.8 16.0 15.7 14.5 12.0 13.0 12.5 10.9 9.7 13.1 14.1 n/m n/m n/m 8.0 6.7 6.4 4.2 2.0 3.5 2.5 7.2 6.9 6.4 1.4 1.0 2.6 4.8 6.5 9.4 10.1 10.9 7.9 11.9 8.4 10.9 10.5 7.2 5.7 8.5 7.5 5.5 7.0 n/m 9.2 n/m n/m n/m 81.3 448.0 46.0 58.2 32.8 105.5 79.8 239.7 93.0 94.0 138.0 154.7 1015.7 267.8 188.4 447.4 94.1 105.7 87.2 346.4 74.4 198.5 54.5 31.3 279.7 40.7 96.2 51.6 64.3 67.4 31.1 n/m n/m n/m -95.1 -15.1 -25.3 -50.9 -100.0 -100.0 -26.0 -49.9 -47.2 -19.4 -96.0 -40.6 -100.0 -45.7 -33.3 -22.0 -22.6 -29.1 -49.9 -0.5 -35.9 -42.1 -9.3 -12.4 -4.9 4.0 1.7 -3.5 -1.6 0.5 -4.3 © 2014 Preqin Ltd Buyout - Sample Pages Buyout Fund Performance Listings Firm Name Fund 3i 3i 94 LMBO Plan 3i Europe Partners III Fund Size (mn) Region Focus Called (%) Distributed (%) DPI Res. Value (%) RVPI Multiple (X) 1994 170 GBP Europe 98.4 140.0 0.0 1.40 11.7 30.5 4 30-Jun-14 1999 2,300 EUR Europe 90.5 204.0 0.0 2.04 19.3 14.0 1 31-Mar-14 Vintage Net IRR Benchmark (%) IRR (%) Quartile Date Reported 3i Europe Partners IV 2003 3,000 EUR Europe 95.8 190.0 7.0 1.97 27.0 23.0 2 31-Mar-14 3i Europe Partners V 2006 5,000 EUR Europe 92.8 34.0 69.0 1.03 1.0 8.0 4 31-Mar-14 3i Japan Buyouts Fund 2000 20,000 JPY Asia 30.0 163.8 0.0 1.64 32.8 18.4 2 30-Jun-14 3i UK Investment Partners 1996 415 GBP Europe 96.8 139.0 1.0 1.40 8.1 17.2 3 31-Mar-14 3i UK Investment Partners II 1997 378 GBP Europe 95.2 114.0 0.0 1.14 2.6 10.5 3 30-Jun-14 40|86 Advisors Conseco Capital Partners II 1994 624 USD North America 12.5 279.6 0.0 2.80 92.2 19.0 1 30-Jun-14 ABN AMRO Participaties Fourth Causeway Development Capital Fund 1995 Europe 100.0 119.5 0.0 1.19 4.0 17.3 3 30-Jun-14 Second Causeway Development Capital Fund 1986 Europe 100.0 151.8 0.0 1.52 0.2 19.1 4 30-Jun-14 Third Causeway Development Capital 1990 60 GBP Europe 100.0 143.0 0.0 1.43 9.0 18.9 4 30-Jun-14 ABRY I 1989 35 USD North America 71.0 492.0 0.0 4.92 64.0 30.2 1 30-Jun-14 ABRY II 1995 250 USD North America 100.0 332.8 12.6 3.45 47.3 16.1 1 30-Jun-13 ABRY III 1997 581 USD North America 90.6 124.9 5.1 1.30 4.5 9.1 3 30-Jun-13 ABRY IV 2000 776 USD North America 72.3 202.9 43.4 2.46 17.8 15.5 2 30-Jun-13 ABRY V 2005 950 USD North America 91.6 170.7 30.6 2.01 17.6 10.3 1 31-Dec-13 ABRY VI 2008 1,350 USD North America 86.0 101.4 66.5 1.68 17.7 14.8 2 31-Dec-13 ABRY VII 2011 1,600 USD North America 71.6 0.0 117.4 1.17 12.2 10.0 2 31-Dec-13 ACA Group ACA ICT I 2008 4,000 JPY Asia 100.0 82.0 25.0 1.07 25.0 11.9 2 31-Mar-14 Accel-KKR Accel - KKR Company 2000 250 USD North America 100.0 175.2 43.5 2.19 7.9 15.5 3 31-Dec-13 ABRY Partners Accel-KKR Capital Partners III 2008 600 USD North America 86.0 46.9 79.8 1.27 11.7 14.8 3 30-Sep-13 Accel-KKR Capital Partners IV 2013 750 USD North America 3.9 0.0 46.4 0.46 n/m n/m n/m 31-Dec-13 Accent Equity 2003 2003 250 EUR Europe 99.0 142.0 24.0 1.66 30.0 23.0 2 31-Mar-14 Accent Equity 2008 2007 380 EUR Europe 81.0 52.0 104.0 1.56 12.0 8.2 1 31-Mar-14 Accent Equity 2012 2012 3,800 SEK Europe 16.0 0.0 104.0 1.04 n/m n/m n/m 31-Mar-14 ACI Capital ACI Capital II 2006 335 USD North America 68.5 0.0 21.1 0.21 -25.1 8.7 4 30-Sep-13 ACON Investments ACON Equity Partners III 2012 751 USD North America 51.7 0.0 74.8 0.75 n/m n/m n/m 31-Mar-14 ACON Latin America Opportunities Fund 2009 173 USD Americas 92.9 94.0 145.0 2.39 15.0 13.5 1 31-Mar-14 Accent Equity Partners ACON Latin America Opportunities Fund IV 2013 Actera Group Actera Partners 2007 475 EUR Actera Partners II 2012 1,073 USD Europe Activa Capital Activa Capital Fund 2003 146 EUR Europe Activa Capital Fund II 2008 321 EUR Europe 92.5 3.0 96.0 0.99 n/a 9.7 4 31-Dec-13 Advantage Partners AP Cayman Partners II 2007 303 USD Asia 58.4 39.2 24.1 0.63 -10.5 11.6 4 31-Dec-13 Advent International Advent Central & Eastern Europe IV 2008 1,000 EUR Europe 76.9 1.8 77.3 0.79 -8.4 9.7 4 31-Dec-13 Advent Global Private Equity II 1993 415 USD North America 100.0 n/a 0.0 n/a 20.0 23.2 3 30-Jun-14 Advent Global Private Equity III 1997 1,000 USD North America 100.0 n/a 1.6 n/a 8.9 9.1 3 31-Dec-13 Advent Global Private Equity IV 2001 1,500 USD North America 87.2 283.2 2.9 2.86 40.3 24.3 1 31-Dec-13 Advent Global Private Equity IV-A 2002 456 USD Europe 96.0 318.6 6.1 3.25 52.1 27.8 1 31-Dec-13 Advent Global Private Equity V 2005 2,500 EUR Europe 99.0 214.0 31.6 2.46 50.3 10.5 1 31-Dec-13 Advent Global Private Equity VI 2008 6,600 EUR Europe 98.9 50.5 120.0 1.71 21.1 9.7 1 31-Dec-13 13 Americas 1.7 0.0 0.0 0.00 n/m n/m n/m 31-Mar-14 Europe 108.1 41.9 114.4 1.56 15.6 8.2 1 31-Dec-13 29.8 0.0 85.8 0.86 n/m n/m n/m 31-Dec-13 92.4 157.0 8.0 1.65 17.0 23.0 3 31-Dec-13 © 2014 Preqin Ltd 2014 Preqin Private Equity Performance Monitor alternative assets. intelligent data. The Preqin Private Equity Performance Monitor, now in its eleventh edition, features extensive analysis of private equity returns. Find out which are the top performing funds and firms, and view net-to-LP returns for over 7,000 separate vehicles of all types and geographies, including more than 1,200 private real estate funds. This year’s expanded and fully updated edition includes: • Top performing funds and firms identified in extensive league tables by fund type and vintage year. • Annual and quarterly changes in fund valuations. The 2014 Preqin Private Equity Performance Monitor • Examination of risk vs. return for different fund types. • Benchmarks across different fund types by vintage year and geographic focus. • Dry powder and assets under management. • Detailed analysis sections examining key trends by fund type, size and region. alternative assets. intelligent data • Private equity returns examined against public markets. • The performance of listed private equity. www.preqin.com/pm www preqiin com//pm Visit www.preqin.com/pm for more information Completed Order Forms: Post (to Preqin): New York One Grand Central Place 60 E 42nd Street Suite 630 New York NY 10165 I would like to purchase the 2014 Preqin Private Equity Performance Monitor: Single Copy: Additional Copies: Data Pack: $795 + $40 Shipping £465 + £10 Shipping €550 + €25 Shipping Tel: +65 6305 2200 Fax: +65 6491 5365 San Francisco 1700 Montgomery Street Suite 134 San Francisco CA 94111 €140 + €12 Shipping Shipping Details: Name: Cheque enclosed (please make cheque payable to ‘Preqin’) Charge my: Visa Firm: Mastercard Job Title: Amex Address: Please invoice me Card Number: City: Name on Card: State: Expiration Date: Post/Zip: Security Code: Country: Telephone: Email: Tel: +1 415 835 9455 Fax: +1 440 445 9595 Email: [email protected] Data Pack contains all underlying data for charts and graphs contained in the publication. 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