Private Equity Horizon IRRs by Fund Type

by Gary Broughton

  • 31 Aug 2012
  • PE

Horizon IRR figures provide 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 cash flow data for over 2,000 private equity funds, Preqin has generated horizon returns over the one-, three-, five- and ten-year periods for the main private equity fund types. From this analysis, it can be seen that the returns across all the time periods are positive. Over the short term (one-year timeframe) the returns lie around 8.0%, with mezzanine funds returning 15.7%.

Across the three-year time frame buyout funds report returns of 15.7%, mezzanine 9.3%, funds of funds 8.0% and venture capital 7.0%. Over the five-year period the returns lie around the 5.0% mark with venture yielding a return of 2.8%. Over the long term horizon of 10 years, buyout funds have generated 19.0%, mezzanine 10.8%, funds of funds 5.0%, and venture capital 0.3%, showing that, in the long-term, most private equity fund types can offer attractive returns.

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