Quarterly and Yearly Change in NAV of Private Equity Funds

by Gary Broughton

  • 06 May 2011
  • PE

Analysis of quarterly and yearly fund valuations can reveal important insights into the performance of private equity as an asset class.

By using the successive quarterly and annual fund valuations of over 900 of the total 5,300 private equity vehicles Preqin holds performance data for, it is possible to calculate the average percentage change in Net Asset Value (NAV). Weighted metrics can also be calculated, by taking into account variations in fund size, enabling evaluation of the impact of the larger funds against the industry as a whole.

By examining the performance data of a sample of 900 private equity vehicles, we have seen that quarterly private equity fund valuations have increased consistently from Q4 2009 to Q3 2010. Compared to other fund types, buyout funds have seen the greatest percentage increase in fund valuations in Q4 2010 and Q3 2010, with weighted percentage increases of 6.3% and 3.5% respectively.

Additionally, yearly private equity fund valuations have increased consistently since Q4 2008. The largest percentage increase NAV occurred during the year of March 2009 to March 2010, with an increase of 13.3% in the non-weighted metric and 19.2% in the weighted metric. This period represented the start of recovery in the wake of the financial crisis and shows that the larger funds, which suffered the most during the crisis, have shown significant improvement in portfolio valuations since this time.

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