Performance of Buyout Funds with a Focus on Business Services

by Hayley Wong

  • 24 Feb 2012
  • PE

For the purposes of this analysis, Preqin has used the performance data of 433 business services-focused buyout funds, with a vintage between 2000 and 2011, to examine median called capital, distribution and value metrics.

The more mature funds with a vintage of 2006 and older have called up more than 90% of their capital. In contrast, funds with a more recent vintage 2010 and 2011 have called up 25.4% and 2.7%, respectively. Of this benchmark, vintage 2001 funds generate the highest median distribution of 188%, while vintage 2000, 2002 and 2003 funds have distributed more than 100% to its investors. Vintage 2004-2010 report a distribution of less than 100%, but yield higher median values compared to the older vintage funds. Vintage 2005 buyout funds have a median value of 84.4%, vintage 2004 report values of 76.1% and vintage 2003 funds report 53.7%.

Analysing the median net IRRs of the funds within this sample of funds, vintage 2001 vehicles generate the highest median net IRR of 27.7%, while vintage 2006 funds report the lowest median net IRR of 2.6%. The older vintage funds generate net IRRs above 10%, while vintage 2005-2008 have net IRRs below 10%. The only recent group of business service-focused buyout funds to yield a net IRR above 10% are vintage 2009; however it is important to remember that funds of this vintage are still investing and so the returns are likely to change over time.

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