Diverse- and Women-Owned Private Equity Firms Exceed Benchmarks Again

WASHINGTON, Dec. 19, 2023 /PRNewswire/ -- Diverse- and women-owned private equity firms continue to outperform their benchmarks despite a challenging business environment, according to a report released today by the National Association of Investment Companies (NAIC). Updated and published biennially, Examining the Returns 2023: Further Evidence of Diverse-Owned Private Equity Firm Outperformance is the industry's only quantitative study that measures the performance of diverse- and women-owned private equity firms.

Data for the study was compiled using a sample of NAIC member firms. To ensure objectivity and transparency, NAIC engaged KPMG and GCM Grosvenor to anonymize and aggregate the performance data and complete performance benchmark analyses across a number of metrics and a variety of time periods.

Key findings of Examining the Returns 2023 include: 

• As in prior years, the NAIC Diverse Private Equity Index significantly outperformed the benchmark Burgiss median return, recording a net Internal Rate of Return (IRR) of 17.23 percent, a net Total Value to Paid In (TVPI) of 1.68x and Distributed to Paid-In Capital (DPI) of 0.66x compared with Burgiss median performance of 11.58 percent, 1.37x and 0.44x, respectively. This represents almost 600 basis points of outperformance from an IRR perspective.
• Roughly 31 percent of the funds in the NAIC Private Equity Index produced top-quartile net IRRs during the period studied.
• The NAIC Private Equity Index generated an IRR in the first or second quartile 72.2 percent of the time and posted a TVPI and DPI in the first or second quartile approximately 83 percent of the time.

The 2023 study reaffirms the proficiency of diverse-owned private equity firms in both identifying investment opportunities and executing their strategies.

"This underutilized segment of the private equity industry consistently outperforms established industry standards. We hope that studies such as this will continue to shine a spotlight on the talent leading diverse-owned firms," says Robert L. Greene, President & CEO of NAIC. "Our biennial study demonstrates that investing in diverse managers does not detract from fiduciary duty or the ability to generate superior returns. As the financial services industry evolves, embracing inclusivity becomes not just a moral imperative but a strategic and fiduciary necessity."

The full report is available here: https://naicpe.com/wp-content/uploads/2023/12/NAIC-2023-Examining-the-Returns-Final.pdf

About the National Association of Investment Companies

Celebrating more than 52 years of advocacy and performance, the National Association of Investment Companies (www.naicpe.com) is the trade association and largest network of diverse- and women-owned alternative investment firms. NAIC's membership comprises more than 194 diverse-owned alternative investment firms that collectively manage over $406 billion in assets under management. NAIC member firms invest with over 2,200 portfolio companies globally and consistently generate superior returns that help fuel the growth of the retirement and asset management industries.

CONTACT:
Kristen Perlman
Director of Marketing and Communications
National Association of Investment Companies
kperlman@naicpe.com

SOURCE National Association of Investment Companies