An Examination of Mezzanine Fund Performance

by Bronwyn Williams

  • 29 Jan 2010
  • PE

In recent years mezzanine funds have gained in popularity as the private equity industry has expanded, with an increasing number of buyout funds seeking a source of capital to compensate for the shortfall between equity and various types of debt financing. Despite being a niche sector of the private equity industry, Preqin has collected information on 436 mezzanine funds, and of these funds holds performance data for 158 vehicles.

The median IRR for vintages 1997-2004 generally lies around the 10% mark. Vintage 2001 funds have produced the best returns to date, with a median IRR of 20% and the top-quartile boundary near the 25% mark. Even the bottom quartile for that vintage was relatively high, with a boundary of 16%. Apart from the recent vintages of 2005 and 2006, and vintage 1996, the bottom quartile boundary has remained in the region of 5-10%.

For more information on the performance of mezzanine funds and all other types of private equity fund, please click here.

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