* Data to be available through Eikon
* Thomson ONE customers will be migrated
* End of an era in private equity benchmarking
The deal marks the end of an era: Thomson Reuters and its predecessors, including Venture Economics, collected and published buyout and venture capital return data and statistics for more than two decades. Countless sponsors and investors have used the Thomson Reuters benchmarks — built upon such measures as internal rate of return and total-value-to-paid-in-capital — to compare their performance with that of their peers; academics tapped the database for papers exploring the overall performance of the industry. Over the years a number of competing products have sprung up, including ones offered by The Burgiss Group, Pitchbook Data Inc and Preqin.
The Thomson Reuters performance benchmarks remain available through the private equity module of the Thomson ONE platform; customers of that module will be upgraded to Eikon over the next few months, according to a source familiar with the transition. Customers can expect first-quarter 2014 Cambridge Associates data to become available in August. Thomson Reuters intends to provide customers of the module an automatic upgrade with no additional charge, according to a document prepared for customers. Regular Eikon customers will not automatically have access to the benchmarking data but can work out deals separately for access, our source said.
So, what kind of benchmarking data will be available through Eikon? The foundation of the product will be the Cambridge Associates database of some 5,600 private equity funds around the world sponsored by more than 1,600 fund managers. Customers will be able to “cut and slice” the data on an aggregated basis — they will not have access to information about individual funds — using a platform developed jointly by Thomson Reuters and Cambridge Associates, according to our source.
Updated quarterly, the data go back to vintage year 1981 for U.S. venture capital funds and to 1986 for other fund stages. Among sub-sets of private equity, the database includes buyout, venture capital, growth equity, real estate, funds of funds, secondary, energy, mezzanine and distressed debt funds. Regional benchmarks include the United States, Europe, Asia-Pacific, Latin America and Caribbean, Canada, the Middle East and Africa. Customers will be able to group buyout funds by size, such as small-cap, mid-cap, large-cap and mega-cap. Along with return data, Thomson Reuters plans to provide aggregate data on the performance of portfolio companies, along with “exposure reports with industry and geographic breakdowns,” the customer document says.
Cambridge Associates, which provides investment advisory and related services to institutional investors, sources its return data from the financial statements of fund managers, subjecting it to “rigorous quality control via independent verification processes,” according to the customer document. The consulting firm will continue to provide benchmarking products to its own clients. In 2009 the firm teamed up with the National Venture Capital Association to allow the association to publish benchmarks and provide more advanced tools to its members.
Cambridge Associates every quarter makes free on its website reports covering results for its U.S. Venture Capital Index and U.S. Private Equity Index, two of the industry’s best-established benchmarks. Starting with its second-quarter 2013 data, the firm began publishing in these reports modified public market equivalents, which allow for the direct comparison of private equity and public equity returns. Capital Dynamics, a Zug, Switzerland-based advisory firm, alleged in a lawsuit filed late last year that Cambridge Associates was infringing on a Capital Dynamics patent in making its calculation. In a Buyouts article about the suit a Cambridge Associates managing director said she was “confident that there has been no patent infringement.”
The Thomson ONE benchmarking data, set to be refreshed one last time in May with fourth-quarter numbers, will be available through Thomson ONE “for a short time” longer, according to the customer document. Thereafter the data will be housed in a confidential archive, unavailable to customers. Those looking for historic benchmarking statistics from Thomson Reuters will still be able to find hard copies of the annual Investment Benchmarks Reports, which the Deals Group (publisher of Buyouts Magazine and peHUB) published through 2011.
Thomson Reuters decided to team with Cambridge Associates on benchmarking data to focus its efforts on collecting and publishing private equity fundraising and deal-making, according to our source. The company had gathered its returns data from a variety of sources, including from limited partners, from capital account statements provided by general partners, and from quarterly, semi-annual and annual surveys of general partners.
At press time we were unable to reach an executive at Cambridge Associates for comment.