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Mezzanine IRR Dispersion by Vintage Year

by Bronwyn Williams

  • 12 Nov 2010
  • PE

Preqin’s Performance Analyst database currently holds performance metrics for 176 mezzanine funds. In terms of capitalization, this represents almost 60% of mezzanine funds raised since 1990. For funds on the database with a vintage between 1985 and 1994, there were only three funds that generated a negative IRR. This is in contrast with later vintages, which have more IRRs in the red.

The two highest IRRs posted by mezzanine funds have been by a 1997 vintage fund and a 2005 vintage fund, each with an IRR of 55%. The returns for vintages 2000 and 2002 are closely clustered together, whereas vintages such as 1997 and 2005 show the greatest spread, in large part due to their respective outperforming funds. The returns for the least mature vintages are lower comparatively to other vintages, but as these funds are in the early stages of their fund life it is still possible for these returns to improve. Furthermore, vintage 2007 funds have only invested 40% of their capital on average, so still have a significant amount of dry powder at their disposal.


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