The BVCA’s annual Performance Measurement Survey examines the performance of UK private equity and venture capital funds and how they compare against other asset classes.
The survey, produced in association with PwC and Capital Dynamics, finds that the combined 10 year internal rate of return (IRR) for private equity and venture capital stood at 14.9% for 2014, nearly double the figure returned by UK pension fund assets (7.8%) and the FTSE All-Share (7.6%).
Venture capital funds in particular have had a successful year, with 2014 marking both the highest performance for all venture funds since the financial crisis, and the first time that since-inception returns for pre-2002 funds have been positive since the BVCA began measuring their performance.
- Since-inception performance of all funds recorded an IRR of 13.8%, remaining strong and well within the typical range of returns for the industry.
- The five year IRR for all funds covered in this survey was 11.5%. This compares with the returns generated by total UK pension fund assets of 9.4% and FTSE All-Share of 8.7%.
- Pre-2002 venture capital fund vintages obtained an IRR of 34.2% in 2014 and the asset class as a whole reached an annual IRR of 14.6%.
- Small MBOs have remained strong performers, with a since-inception IRR of 14.9% and a 10 year IRR of 39.2%.
John Dwyer, PwC deals leader, said:
“Private equity has had its downs as well as ups over the last ten years, and returns from different years tell their different stories. Taking the decade as a whole though, PE has shown real resilience in comfortably outperforming pension assets and the listed sector. More recent, post-crisis vintages have performed well and successful exits over the last few years have shown how the industry can respond to a downturn, which is encouraging for investors.”