Private Equity Horizon IRRs as of 30 June 2009

by Etienne Paresys

  • 04 Dec 2009
  • PE

All private equity strategies posted negative one-year returns for the period ending June 30, 2009. With a horizon IRR of -28.0%, buyout is the worst performing private equity strategy. Being the largest strategy by share of capital commitments, it is significantly influencing the returns calculated for the private equity industry as a whole. Fund of funds is the second-worst performing strategy, with a horizon IRR of -19.4% during the period. Other strategies’ horizon IRRs have suffered slightly less, with venture capital at -16.0%, and mezzanine and distressed private equity around -14%.

Mid- and long-term horizon IRRs are all in positive territory, with the exception of the three-year fund of funds IRR to June 09, which stands at -0.7%. Other private equity strategies are showing modest three-year returns, at around 2%. With a three-year IRR of 9.9%, mezzanine funds are the best performers during that period. Long-term performance remains very strong, with buyout and mezzanine at around 25% over the five-year period. Venture capital and fund of funds are posting positive but lower returns over that period, with five-year horizon IRRs at 3.2% and 6.3% respectively.

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