Private Equity Horizon IRRs as of 31 March 2012 by Fund Type

by Anna Strumillo

  • 26 Oct 2012
  • PE

Horizon IRR figures give an insight into the trends and developments within the private equity industry over a set period of time. They can provide investors with an important measure of the performance of the private equity asset class.

Using Preqin’s cash flow data, we have generated horizon returns over the one-, three-, five- and ten-year periods for private equity as a whole, as well as some of the main private equity fund types (buyout, venture capital, fund of funds and mezzanine), in order to provide an overview of the performance of the private equity industry.

Over these horizon periods, all private equity fund types examined are showing positive returns through 31st March 2012. Over the one-year period, buyout funds have the highest returns of 10.4%, with all other fund types, and private equity as a whole, producing returns ranging between 7.3% and 9.4%.

Buyout funds also have the highest horizon returns over the three- and five-year periods, with 20.3% over three years and 6.5% across the five-year period. Over these periods, the returns of private equity as a whole closely track those of buyout funds, which is unsurprising as buyout funds have made up the majority of capital in the industry since the buyout boom period.

However, there is a larger gap between buyout funds and the industry as a whole over the ten-year horizon. This period began before the mega-buyout era, when buyout funds constituted a lower proportion of the overall capital in the industry. The ten-year horizon returns stand at 19.9% for buyout funds and 12.8% for all private equity as of March 2012.

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