NEW YORK, Oct. 8, 2019 /PRNewswire/ -- The latest CEPRES Private Equity Buyout analysis shows the IRR spread between top performing funds and the market median has significantly increased since the GFC.
The analysis, based on primary sourced cash flow data from over 7,000 funds on the CEPRES platform, shows that between Vintage Year 2009 and 2018, median net IRR for buyout funds hover around 15% with a range of 12.9% to 16.4%, whereas top performers based on the upper quartile are at 22%, with the spread widening in most years since the GFC.
Overall median Net IRRs returns show a trend of a tapering down in the last decade, whereas top quartile performance has largely been increasing, as shown in the figure below.
In contrast when it comes to money multiples as measured by Net TVPI (Total value over Paid in capital), both median and top quartile performance has consistently trended down. In the most recent years there is a dip followed by a strong recovery, but it is too early to tell how final results will develop.
The full report is available to CEPRES members from: https://www.cepres.com/latest-intelligence-for-lps
"The trend in the last decade shows top quartile GPs driving IRRs at the expense of multiples. This can partially be explained by more aggressive timing of deals and a very active secondary buyout market with GPs buying and selling portfolio companies more frequently. Additionally use of subscription credit lines has accelerated IRRs without increasing fundamental investment value. It remains to be seen how credit lines will impact liquidity in the event of any market correction. Investors should look deeper into their portfolios to better understand such financial engineering versus portfolio company fundamentals."
Christopher Godfrey, President, CEPRES.
CEPRES is the leading digital platform for investment analytics & data solutions for private capital markets. CEPRES began in 2001 as the Center of Private Equity Research and was the first to 'look-through' private market funds to underlying deal and asset performance. Today, our award winning online platform securely connects thousands of professionals in the largest private investment network in the world. CEPRES combines the most secure digital data exchange with sophisticated SaaS solutions and expert analysis frameworks to empower LPs, GPs and related professionals. Through CEPRES decision makers can secure their investment data to gain true insights on their portfolio of funds down to single operating assets within a confidential yet fully flexible framework.
The CEPRES platform includes a network connecting buy- & sell-side market participants. Institutional Investors (LPs), Fund Managers (GPs), Advisors, Administrators, Fund of Funds and other investment professionals interact on one platform: GPs confidentially benchmark their track record, attract fitting capital sources and demonstrate their alpha to investors. LPs forecast their portfolio outcomes, optimize asset allocations and enhance due diligence.
To date over 2,300 GPs & LPs have securely exchanged investment data of over 7,300 funds and 74,300 deals worth over $27.1 Tr. in Enterprise Value.
For further information visit www.cepres.com.
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SOURCE CEPRES Corp