eFront: Latest Private Equity Performance Overview

October 21, 2021

eFront, the leading financial software and solutions provider dedicated to Alternative Investments, has released its latest Quarterly Private Equity Performance Overview, covering the period to the end of Q1 2021.

The report shows that following the massive pandemic shock-driven correction in the first quarter of 2020, the following 12 months (Q2 2020 – Q1 2021) brought a persistent recovery and further growth to the global Buyout and VC markets. In the first quarter of this year, VC funds have globally generated a quarterly return of 12.9%, while the Buyout funds produced 9.6% over the same period.

This evolution in private equity markets significantly drifts away from the previous decade’s pattern where we recorded quarterly returns oscillating within the +/- 5% band. North American Funds overperformed in the LBO market in Q1 2021, while European VC funds produced the largest relative returns among the regions.

The new edition of the eFront Insight Research Quarterly Report presents two sets of performance metrics. The first is based on the fund level transaction data sourced directly from limited partners who report on the capital calls and distributions paid in and received from the GP managers they are invested with. Transaction data allows the direct calculation of the net-of-fees performance averaged out across the selection of funds.

The second set of performance metrics leverages the deal-level data sourced from GP managers who report to their investors on portfolio deal characteristics and financials on a quarterly basis. This rich and granular dataset enables a thorough breakdown of performance figures across regions and industry sectors. All the reported performance metrics in the second part are presented on a gross-of-fees basis.

Key findings

• In the first quarter of this year, VC funds have globally generated 12.9% of a quarterly return, while the Buyout funds produced 9.6% over the same period.
• The top performing region for VC was Europe, generating a quarterly return of 17.9%, with North America close behind on 15.5%.
• For Buyout funds, North America performed best, generating 10.4%, with Europe on 7.08%.
• In terms of rolling 12-month returns, North American VC led on 65.3%, with European VC on 56.1%, while the figures for Buyouts were 43.3% and 38.0% respectively.
• For investment-to-date performance, North American VC also leads, with a TVPI of 1.78x, while European VC sits at 1.58x. For Buyout funds, the figures are 1.58x and 1.63x respectively.
• Looking at the deal-level data, the effects of the Covid-19 pandemic can clearly be seen, with Information Technology (77.6%), Healthcare (68.8%) and Consumer Discretionary (67.1%) leading in terms of quarterly return by industry sector.
• Over the past 12 months, the best performing region globally by some distance has been Central and Eastern Europe (146.7%), followed by Oceania (78.0%) and North America (64.8%).