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Performance of Distressed Private Equity Funds - June 2012

by Anna Strumillo

  • 22 Jun 2012
  • PE

Preqin currently holds performance data for over 240 distressed private equity funds, a category that includes distressed debt, special situations and turnaround funds.

An examination of the median IRR, together with the top and bottom quartile boundaries, for distressed private equity funds with vintage 2000-2009 shows that the median returns range from 6.2% for vintage 2006 funds to 23.2% for funds with vintage year 2002. The median IRRs for vintages 2000-2003 are all above 19.0%, while for funds with vintages 2005-2007 the median IRRs fall below 9%. Similarly, the top quartile boundary lies at above 30.0% for distressed private equity funds with vintages 2001-2003. Vintage 2002 funds have the highest top quartile boundary of 52.2%. Top quartile boundary for funds with vintages post-2003 ranges between 8.7% for vintage 2006 funds and 25.3% for vintage 2009 funds.

It is noticeable that all the boundaries for distressed private equity funds with more recent vintages are higher compared with previous vintages.  This can be explained by more investment opportunities for distressed private equity managers due to the global economic crisis resulting in increased market instability and more recently concerns over European sovereign debt. Nonetheless, it must be noted that funds with recent vintage years are still early in their fund lives and therefore fund performance could change as the investments mature.

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