European Returns Top Public Markets

European private equity performance showed positive returns across all investment categories for the 20-year investment horizon for the period ending Dec. 31, according to Thomson Reuters European Private Equity Performance Index. Combined private equity returns outperformed the Morgan Stanley Euro Equity Index across every time horizon ending Dec. 31, and outperformed the FTSE100 across all except the three-year time horizon.

The Private Equity Performance Index is based on quarterly statistics from Thomson Reuters’ Private Equity Performance Database analyzing the cash flows and returns for more than 1,431 European venture capital and private equity partnerships with a capitalization of €354.3 billion ($443.3 billion).

The depressed debt and capital markets environment during the second half of 2011 dragged down returns in the shorter time horizons as exit activity was down, according to the report. One-year time horizons moved downwards, registering a 14.8 percentage point decrease from the prior year for venture capital funds (2.7 percent), and a 14.3 percentage point decrease for buyout funds (5.5 percent).

However, the longer-term 20-year time horizon was positive for venture capital funds with a slight increase from June last year, to 1.5 percent from 1.2 percent. Balanced VC and later stage achieved double digit performance figures of 10 percent and 11 percent for the three year and one year time horizons respectively.

In the buyouts category (which posted an 11.3 percent IRR in total in the 20-year time horizon) small, medium and large funds drove performance with double-digit performance figures of 11.4 percent, 17.5 percent and 11.6 percent respectively. Mega buyouts managed a 4.1 percent IRR for the period, but did register double digit figures of 14.5 percent for the three year investment horizon.

The associated table takes a look at some of the top performers boosting these figures among the European buyout houses. Data is from the California Public Employees’ Retirement System performance report for Sept. 30. Permira Advisers Ltd and CVC Capital Partners are both prominent within the CalPERS European portfolio. The top seven European buyout performers are domestic European players, with an Italian-focused fund featuring in second place, a Polish vehicle in seventh place and two U.S. giants making appearances in eighth and tenth place.

The top three of these European funds are also within the top ten performers of the CalPERS private equity portfolio for the period. Other top European performers, which are not CalPERs investee funds include UK-based Charterhouse Capital Partners VII which posted an IRR of 40.02 percent and investment multiple of 2x and Apax Europe V-A, which generated a 36.53 percent IRR and multiple of 2.1x, according to Washington State Investment Board’s performance report as of Sept. 30.

(Angela Sormani is a special correspondent for Buyouts in London.)