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Performance Benchmarks 2007 European Private Equity PowerPoint PPT Presentation


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Conducted by Thomson Financial on behalf of EVCA. Performance Benchmarks 2007 European Private Equity. Methodology for Performance Benchmarks. All calculations are done at the fund level by Thomson Financial based on cash flows and NAVs reported by participating LPs and GPs

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Performance Benchmarks 2007 European Private Equity

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Conducted by thomson financial on behalf of evca

Conducted by Thomson Financial on behalf of EVCA

Performance Benchmarks 2007European Private Equity


Methodology for performance benchmarks

Methodology for Performance Benchmarks

  • All calculations are done at the fund levelby Thomson Financial based on cash flows and NAVs reported by participating LPs and GPs

  • Returns are net of management fees and carried interest

  • Returns are calculated with cash flows in Euros

  • Cash flow database contains altogether 1,215 European funds

  • Definitions:

    • Pooled IRR: IRR of a group of funds where their cash flows have been aggregated together before IRR calculation

    • Investment Horizon Return: IRR calculated with Net Asset Value as capital outflow at beginning of period, Net Asset Value at end of period, and actual cash flows in between


Background

Background

  • More difficult market conditions for GPs in the last 6 months

    • Leverage

    • Refinancing options

    • Pressure to invest

    • IPO market

    • Deal pipeline quality

  • Increased importance of reporting, benchmarking and analytics


Investment benchmarks database european sample growth

Investment BenchmarksDatabaseEuropean Sample Growth

Source: Thomson Financial on behalf of EVCA


Mid to long term venture irr remains in positive territory

Mid-to Long-Term Venture IRR Remains In Positive Territory

European Venture 3-,5-,10-Year Rolling IRRs

Source: Thomson Financial on behalf of EVCA


Mid to long term irrs show strong momentum for buyout funds

Mid-to Long-Term IRRs Show Strong Momentum for Buyout Funds

European Buyouts 3-,5-,10-Year Rolling IRRs

Source: Thomson Financial on behalf of EVCA


Vc and bo funds in europe and usa 5 year rolling irrs

VC and BO Funds in Europe and USA5-Year Rolling IRRs

Europe

USA

Returns calculated with cash flows in dollars

Source: Thomson Financial on behalf of EVCA


Top quarter european funds return 23 5 funds formed 1980 2007

Net IRR

Percentile

100

357.2%

Avg Top quarter

23.5%

11.0%

75

2nd quarter

50

3rd quarter

25

4th quarter

Top Quarter European Funds return 23.5%Funds Formed 1980-2007

Source: Thomson Financial on behalf of EVCA


Indicators show good average performance for europe

Indicators Show Good Average Performance for Europe

European Private Equity Funds Formed 1980-2007Investment Horizon IRR (%) for period ending 31-Dec-2007

Source: Thomson Financial on behalf of EVCA


European venture funds by size formed 1980 2007

European Venture Funds by Size Formed 1980-2007

Net IRRs to Investors

Investment Horizon IRR (%) for period ending 31-Dec-2007

These results refer to the fund size, not the deal size

Source: Thomson Financial on behalf of EVCA


European buyout funds by size formed 1980 2007

European Buyout Funds by Size Formed 1980-2007

Net IRRs to Investors

Investment Horizon IRR (%) for period ending 31-Dec-2007

These results refer to the fund size, not the deal size

Source: Thomson Financial on behalf of EVCA


European performance by vintage year groups

European Performance by Vintage Year Groups

Net IRRs to Investors

Grouped By Vintage Years From Inception to 31-Dec-2007

Source: Thomson Financial on behalf of EVCA


Private equity and public market comparators

Private Equity and Public Market Comparators

10-Year Rolling IRR for 2000-2007

*Comparators are Internal Rates of Return (IRR). IRRs for public market indices are calculated by investing the equivalent cash flows that were invested in private equity into the public market index. Then an equivalent IRR is calculated for each index.

Calculations based on methodology proposed by J Coller and published by A Long and C Nickles.

Source: Thomson Financial on behalf of EVCA


Conclusion

Conclusion

  • Long-term performance

    • Stays constant at around 12% net IRR, with top quarter average IRR of 23.5%

    • 5-year rolling average is steadily increasing for both venture and buyout funds

  • Shorter-term performance

    • 3-year IRR remains very strong for buyout at 21.9% IRR, and decreases slightly to 4.4% IRR for venture funds


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