PRIVATE CAPITAL PERFORMANCE UPDATE: Q4 2017

Transcription

1 PRIVATE CAPITAL PERFORMANCE UPDATE: Q 17 PRIVATE CAPITAL PERFORMANCE UPDATE: Q 17 Fig. 1: Horizon IRRs Fig. : Rolling One-Year Horizon IRRs Annualized Return Year to 3 Years to 5 Years to 1 Years to Venture Capital Fund of Funds Mezzanine Distressed Private Equity Private Equity One-Year Horizon IRR Year to Mar-13 1 Year to Sep-13 1 Year to Mar-1 1 Year to Sep-1 1 Year to Mar-15 1 Year to Sep-15 1 Year to Mar-1 1 Year to Sep-1 1 Year to Mar-17 1 Year to Sep-17 1 Year to Venture Capital Fig. 3: Rolling Three-Year Horizon IRRs Fig. : Horizon IRRs by Fund Size* 5 Three-Year Horizon IRR Venture Capital Annualized Return 15 1 Mega Large Mid Small 3 Years to Mar-13 3 Years to Sep-13 3 Years to Mar-1 3 Years to Sep-1 3 Years to Mar-15 3 Years to Sep-15 3 Years to Mar-1 3 Years to Sep-1 3 Years to Mar-17 3 Years to Sep-17 3 Years to 5 1 Year to 3 Years to 5 Years to Fig. 5: Horizon IRRs by Fund Primary Geographic Focus Annualized Return North America Europe Asia DATA SOURCE Preqin s online platform is the industry s most extensive source of net-to-lp private capital fund performance, with full metrics for over 9, named vehicles. For more information, or to arrange a demonstration, please visit: Year to 3 Years to 5 Years to *Size ranges: Vintage : Small $mn, Mid $1mn-$5mn, Large > $5mn Vintage 1997-: Small $3mn, Mid $31mn-$75mn, Large $751mn-$bn, Mega > $bn Vintage -: Small $5mn, Mid $51mn-$1,5mn, Large $1,51mn-$.5bn, Mega > $.5bn 1 Preqin Ltd. /

2 PRIVATE CAPITAL PERFORMANCE UPDATE: Q 17 Fig. : Assets under Management by Dry Powder ($bn) Unrealized Value ($bn) Fig. 9: Change in NAVPS and Share Price of Listed Private Equity by Quarter Fig. 7: Assets under Management by Geographic Focus Geographic Focus Dry Powder ($bn) Fig. 1: Median s by Fund Type Unrealized Value ($bn) North America 9. 1,. Europe Asia Latin America Diversified Multi-Regional Australasia Middle East & Israel.. Africa Fig. : Assets under Management by Fund Type Fund Type Dry Powder ($bn) Unrealized Value ($bn) Private Equity 1,.7,35.9 Real Estate Private Debt Infrastructure Natural Resources Only Average Change in NAV from Previous Quarter Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Median Private Capital Venture Capital Real Estate Change in NAVPS of Listed Private Equity Change in Share Price of Listed Private Equity Private Equity Online Fig. 11: J-Curve: Annual Median s by 15 Vintage Vintage PREQIN S PRIVATE EQUITY DATA PLATFORM Median Vintage Vintage Vintage Vintage Vintage Vintage Vintage Preqin provides unrivalled data and intelligence on private equity and venture capital, including fundraising, fund managers, institutional investors, fund performance, deals and exits, service providers, fund terms and conditions and more. : info@preqin.com : Investment Year Vintage Preqin Ltd. /

3 PRIVATE CAPITAL PERFORMANCE UPDATE: Q 17 Fig. 1: PrEQIn Quarterly Index: All Strategies vs. Index (Rebased to 1 as of 31 December ) Index Return (Rebased to 1 as of 31-Dec-) Dec- 3-Jun-1 31-Dec-1 3-Jun- 31-Dec- 3-Jun-3 31-Dec-3 3-Jun- 31-Dec- 3-Jun-5 31-Dec-5 3-Jun- 31-Dec- 3-Jun-7 31-Dec-7 3-Jun- 31-Dec- 3-Jun-9 31-Dec-9 3-Jun-1 31-Dec-1 3-Jun Dec-11 3-Jun-1 31-Dec-1 3-Jun Dec-13 3-Jun-1 31-Dec-1 3-Jun Dec-15 3-Jun-1 31-Dec-1 3-Jun PrEQIn PrEQIn Private Equity PrEQIn PrEQIn Venture Capital PrEQIn Real Estate PrEQIn Fund of Funds PrEQIn Distressed Private Equity Fig. 13: Consistent Top Performing Fund Managers 1 Years ($mn) Quartile ing Inflexion Private Equity Partners UK, Rhône Group US,7 1. Brookfield Capital Partners Canada 5, Clearview Capital US Main Capital Partners Netherlands FIMI Israel, Veritas Capital US, AUCTUS Management Germany Wynnchurch Capital Partners US 1, Vista Equity Partners US, CapStreet Group US DFW Capital Partners US Egeria Capital Management Netherlands, Harvest Partners US 3, Industrial Growth Partners US 1, Montefiore Investment France Nautic Partners US, Palatine Private Equity UK TowerBrook Capital Partners UK 1, Triton Partners Jersey 9, Fig. 1: Consistent Top Performing Growth Fund Managers 1 Years ($mn) Quartile ing Ampersand Capital Partners US Trustbridge Partners China 3, KJK Capital Finland LLR Partners US, Spectrum Equity US 3, Genesis Capital Czech Republic Insight Venture Partners US 1, Lombard Investments US Technology Crossover Ventures US, Preqin Ltd. /

4 PRIVATE CAPITAL PERFORMANCE UPDATE: Q 17 Fig. 15: Consistent Top Performing Venture Capital Fund Managers 1 Years ($mn) Quartile ing Benchmark Capital US 1, Foresite Capital US 1, Avalon Ventures US OrbiMed Advisors US 5, Sequoia Capital US 13, General Catalyst Partners US 3, Vickers Venture Partners Singapore Matrix Partners US 1, Target Partners Germany Peregrine Ventures Israel AJU IB Investment South Korea Forbion Capital Partners Netherlands Third Rock Ventures US 1, DN Capital UK Pontifax Israel Goodwell Investments Netherlands Cottonwood Technology Fund US CRCM Ventures US Future Venture Capital Japan CRV US 1, GGV Capital US 3, Fig. 1: Consistent Top Performing Private Equity Fund of Funds Managers 1 Years ($mn) Quartile ing ATP Private Equity Partners Denmark, 1. Storebrand Asset Management Norway 1, Weathergage Capital US Bowside Capital US Nordea Private Equity Denmark Twin Bridge Capital Partners US 1, Franklin Park US Greenspring Associates US, Aberdeen Standard Investments UK 3, Axiom Asia Singapore 3, BlackRock Private Equity Partners US 3, Siguler Guff US, Darwin Ventures US LGT Capital Partners Switzerland 1, Schroder Adveq Switzerland, Industry Ventures US, Spur Capital Partners US HQ Capital International US, TrueBridge Capital Partners US Bay Hills Capital US Preqin Ltd. /

5 PRIVATE CAPITAL PERFORMANCE UPDATE: Q 17 THE IMPORTANCE OF PME BENCHMARKING Investors and fund managers alike frequently benchmark private equity returns against s in order to gauge the relative performance of their investments. For LPs, it is an important exercise which can inform portfolio construction decisions and help to evaluate the performance of one asset class against another. For fund managers, it forms a key aspect of fund marketing to help secure LP commitments. Private equity returns, however, are not directly comparable with indices, due to the asset class s illiquid nature and irregular timing of cash flows. The industry has long used the analogy of comparing apples with oranges when discussing the difficulties of evaluating the differences between private equity and performance. The development of the equivalent (PME) measure of returns provides a more meaningful, like-for-like comparison. PME metrics benchmark the performance of a fund, or a group of funds, against an appropriate public market index while accounting for the timings of the fund cash flows. When PME values are generated for many funds, they can be used as an alternative measure of ranking fund performance, while controlling for broader market behaviour. Preqin provides PME benchmarks and individual fund-level PME comparisons on its online databases, which already provide net-to-lp fund performance metrics for over 9, named private equity vehicles globally. The PME tool enables the comparison of private equity returns against six indices using a choice of three PME methodologies: Kaplan-Schoar PME, Long-Nickels PME and PME+. All of the methodologies utilize the since-inception cash flow data Preqin holds for over,1 funds. The table below provides an overview of the three PME methodologies Preqin now offers, along with their specific strengths and weaknesses. Having the ability to employ a number of different PME methodologies is highly desirable to an investor, but it is also important to maintain awareness that each is fundamentally an approximation until the funds are fully realized. PME Benchmarking Methods Offered by Preqin Benchmark Metric Outperformance if: Description of Calculation Strengths Weaknesses KS-PME (Kaplan- Schoar) Ratio Value above one Calculated by discounting the private capital fund cash flows by the index value. The discounted distributions plus the current remaining value are divided by the discounted contributions to obtain the ratio. The calculation looks at the ratio of outflows to inflows as opposed to generating an IRR, which is time dependent and easily manipulated. Easy to interpret. Ignores the timings of cash flows. LN PME (Long- Nickels) Annualized Rate Estimated PME IRR < Fund IRR Contributions to private capital fund are converted to an equal purchase of shares in the public index. Distributions represent liquidation of share in public index. IRR calculation uses same contributions and distributions as private capital fund, but with a different final period remaining value. LN PME IRR is directly comparable to the private capital fund IRR, allowing an apples-to-apples comparison. IRR sensitive to early distributions. Large distributions could cause a negative PME final period remaining value, making PME IRR calculation computationally impossible. Capital Dynamics PME+ Annualized Rate Estimated PME IRR < Fund IRR Uses a fixed scaling factor (Lambda) to modify each distribution to ensure the PME final period remaining value is the same as the private capital fund remaining value. IRR calculation uses modified contributions and distributions but same final period remaining value. As for LN PME, with the added benefit of avoiding a final period negative remaining value, making PME IRR calculation possible in more cases. PME+ does not match the cash flows perfectly. 5 Preqin Ltd. /

6 PRIVATE CAPITAL PERFORMANCE UPDATE: Q 17 PME BENCHMARKS Fig. 17: KS PME: All Regions 1.3 Fig. : KS PME: North America KS PME Using KS PME Using Fig. 19: KS PME: Europe Fig. : KS PME: Asia & Rest of World KS PME Using MSCI Europe TR KS PME Using S&P 5 TR Fig. 1: LN PME: All Regions Fig. : LN PME: North America <, private <, private Preqin Ltd. /

7 PRIVATE CAPITAL PERFORMANCE UPDATE: Q 17 Fig. 3: LN PME: Europe Fig. : LN PME: Asia & Rest of World < Net IRR, private capital has outperformed the MSCI Europe TR < Net IRR, private capital has outperformed the Fig. 5: PME+: All Regions Fig. : PME+: North America Fig. 7: PME+: Europe MSCI Europe TR Fig. : PME+: Asia & Rest of World Preqin Ltd. /