Performance of Energy and Utilities-Focused Funds

by Hayley Wong

  • 09 Dec 2011
  • PE

Preqin currently holds performance data for over 340 private equity funds that focus investment in the energy and utilities sector. Private equity funds that fall under this industry category are funds which focus investments in energy, oil and gas, power, and utilities.

Using Preqin’s Performance Analyst Custom Benchmark’s module reveals that nearly all vehicles of vintage 1996 to 2005 are fully called up, and the median distributions produced by these funds ranges between 69.0-208.4%. Vintage 1996 funds have returned the highest median amount to investors (208.4%), while vintage 2004 vehicles have returned a median of 69%. Vintage 2006, 2007 and 2008 funds are still in the early stages of their fund life-cycle and have called up a median 87.1%, 73.8% and 54.3% respectively.

Of the funds in this benchmark, all vintage years represented have net IRRs in the black, ranging from 3.2% and 30.1%. The highest net IRR is produced by vintage 2002 vehicles, whereas vintage 2001 funds report the second highest median return, standing at 24.6%. Funds with a more mature vintage, 1996-2000, post median net IRRs in the range of 12.1-19.9%, while funds of more recent vintages, 2003-2008, produce median net IRRs between 3.2% and 17.4%. It should be noted that the returns for funds with recent vintages are subject to change, as managers still have time to add value to their investment portfolios.

As the benchmark contains a variety of underlying fund strategies, the breakdown of performance can vary between these fund types. Across energy and utilities-focused funds of all vintages, natural resources and buyout funds make up the majority of funds producing a median return of 16% and 10.6% respectively. Venture funds make up the second highest number in this benchmark, generating a median net IRR of 1.8%. Distressed private equity and infrastructure each have 16 funds reporting a net IRR and produce a median return of 12.1% and 7.4% respectively.

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