Regional Comparison of Median Net IRRs for Buyout Funds – February 2014

by Vasilisa Starodubtseva

  • 17 Feb 2014
  • PE

Private equity firms offer a wide range of investment types in regards to strategy and geography. Each investment type offers its own unique risks and rewards and this is very much evident in the geographical target of a fund. Preqin's Performance Analyst is the industry's most extensive source of private equity fund performance, and among other metrics, contains median IRRs for buyout funds by primary regional focus, allowing you to understand the geographical variations in performance. Performance Analyst currently holds performance data for over 1,550 buyout funds; 446 of these have a primary regional focus on Europe and 937 have a primary regional focus on North America.

The highest median net IRRs among funds with a European focus is 28.8% for a 2001 vintage fund, while the highest median return for North America-focused funds is 24.0%, also for a 2001 vintage fund. Indeed, 2000-2005 vintage funds with a predominant focus on Europe have reported higher returns than funds with a predominant focus on North America. However, in contrast to the difference in the median net IRRs for vintage 2000-2004 funds, vintage 2005-2006 funds reported similar rates of returns irrespective of the region focus. An increasing difference in the median net IRRs between each region focus becomes evident in vintage 2007-2010 funds, with North America-focused funds reporting higher median IRRs than their European-focused counterparts, 13.6% and 9.9% respectively for 2009 vintage funds. Funds of vintage 2011 reported median net IRRs of 10.7% for European-focused funds and 4.2% for North America-focused funds. However, it is important to note that these funds are still early in their fund lives and performance is likely to change as the funds mature.

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