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Analysis of Private Equity Regional Horizon IRRs as of 30 June 2013

by Emma Underwood

  • 27 Jan 2014
  • PE

Examining the horizon IRRs for private equity funds is one method of gauging how well the private equity industry has performed over a defined period of time. Although past performance is no guarantee of future success, having this information available is useful to investors, which are faced with many choices when considering which private equity investments to make. This article compares the horizon IRRs of private equity funds which have a main investment focus in Europe, North America and Asia over a one-, three- and five-year period.

Preqin’s Performance Analyst online service uses cash flow data for over 2,400 private
equity funds to calculate horizon IRRs over defined periods of time. Over the one-year period to 30 June 2013, funds with a main investment focus in North America produced the greatest return of 16.6%, followed by funds focusing on opportunities in Asia and Europe, with returns of 9.5% and 9.3% respectively.

Similarly, over the three-year period to 30 June 2013, funds with a primary investment focus in North America produced the highest return of 16.2%, trailed by Europe (14.7%) and Asia (6.6%). It is worth noting that over the same time horizon to 31 March 2013, Europe-focused funds performed the best, producing returns of 15.6%; this is 1.2 percentage points ahead of private equity vehicles primarily targeting investment opportunities in North America.

Over the longer time period of five years, the fund returns across the three regions are more closely aligned. Funds with a main investment focus in North America produce the greatest returns of 7.9%. Funds with a main investment focus in Europe produced returns of 6.2%, followed by Asia with 4.2%.

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