Transcript The PitchBook Platform

1Q 2013
Private Equity & Venture Capital
Benchmarking Report
Presentation Slide Deck
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Source:PitchBook
NAV Index
NAV Index Methodology
PitchBook’s newly designed NAV Index tracks the
quarter-to-quarter change in aggregate NAV for
various assets classes. The quarterly change in NAV
is calculated by applying the formula below to all
funds tracked by PitchBook, then taking the
median value for all funds.
Quarterly Percentage Change = [(NAV at end of quarter + distributions during
the quarter – contributions during the quarter) / NAV at beginning of quarter] – 1
Source:PitchBook
Private Equity Has Consistently Outperformed
Both VC and Public Markets since 2001
200
NAV Index for PE (dark blue), VC (light blue), S&P 500 (orange)
180
160
140
120
100
80
60
40
20
0
2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q 4Q 2Q
2001
2002
2003
2004
2005
PE
2006
VC
2007
S&P 500
2008
2009
2010
2011
2012
Source:PitchBook
Since 2007, the Net Change in NAV for
VC and the S&P 500 is Virtually the Same
NAV Index for PE (dark blue), VC (light blue), S&P 500 (orange)
140
130
120
110
100
90
80
70
60
50
40
1Q
2Q
3Q
2007
4Q
1Q
2Q
3Q
4Q
1Q
2008
2Q
3Q
4Q
1Q
2009
PE
VC
2Q
3Q
2010
4Q
1Q
2Q
3Q
2011
4Q
1Q
2Q
2012
S&P 500
Source:PitchBook
Multiple Fund Type
IRRs
Buyout Funds Were the Top Performers in the Early 2000s, but
Mezzanine Funds Have Outperformed in the Post-Crisis Era
Global Average IRR by Vintage Year
25%
Average IRR
20%
15%
10%
5%
0%
2001
2002
All PE Funds
2003
2004
VC Funds
2005
2006
2007
Mezzanine Funds
2008
2009
Fund of Funds
2010
Source:PitchBook
The Performance of VC Funds Has Consistently Lagged
Other Alternative Fund Types Over the Last Decade
Global Median Horizon IRRs
16%
14%
Median IRR
12%
10%
8%
6%
4%
2%
0%
1-year
All PE Funds
Buyout Funds
3-year
VC Funds
5-year
Mezzanine Funds
10-year
Fund of Funds
Source:PitchBook
Private Equity Fund
Returns
Outside of the Most Recent 1-Year Period, Smaller PE
Funds Have Underperformed the Rest of the Industry
Median PE Horizon IRR by Fund Size
18%
16%
Median IRR
14%
12%
10%
8%
6%
4%
2%
0%
1-year
All PE Funds
3-year
Under $250M
5-year
$250M-$1B
10-year
$1B+
Source:PitchBook
The Spread in Performance Between Fund Sizes
Has Decreased in More Recent Vintages
Median PE IRR by Fund Size and Vintage Year
35%
30%
Median IRR
25%
20%
15%
10%
5%
0%
-5%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Vintage Year
Under $250M
$250M-$1B
$1B+
Source:PitchBook
Top Quartile Funds No Longer What They Used to Be
Global PE IRR Quartiles by Vintage Year
40%
35%
30%
25%
IRR
20%
Top Quartile
15%
3rd Quartile
10%
5%
2nd Quartile
0%
-5%
2001
2002
2003
2004
2005
2006
2007
2008 2009 2010
Bottom Quartile
-10%
IRR 25th Percentile
IRR Median
IRR 75th Percentile
Source:PitchBook
Mid-Decade Funds Still Showing Effects of the Crisis
Fund Return Multiples
Global Average PE Fund Return Multiples: DPI (dark blue), RVPI (light blue), TVPI (orange)
2.x
1.96x
1.8x
.36x
1.86x
.42x
1.6x
1.4x
1.63x
1.56x
1.38x
.47x
1.2x
1.x
.8x
1.19x
.57x
1.23x
1.15x
1.15x
1.06x
.94x
.78x
1.59x
.8x
1.44x
.6x
1.16x
.4x
.95x
.93x
.96x
.91x
.98x
.9x
.6x
.2x
.39x
.28x
.22x
.19x
.15x
.04x
2005 2006 2007
Vintage Year
RVPI
TVPI
2008
2009
2010
2011
.x
2001
2002
2003
2004
DPI
Source:PitchBook
The Majority of PE Funds Have Done A Good
Job in Preserving and Growing Their Value
Global PE TVPI Quartiles by Vintage
2.4x
2.2x
TVPI Multiple
2.x
1.8x
1.6x
1.4x
Top Quartile
1.2x
3rd Quartile
2nd Quartile
1.x
Bottom Quartile
.8x
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Source:PitchBook
Recent PE Funds are Taking Longer
to Return Capital to Their Investors
Global PE Median DPI by Vintage Year Over Time
Distributed Over Paid In (DPI)
1.8x
1.6x
1.4x
1.2x
1.x
.8x
.6x
.4x
.2x
.x
2
3
2001
4
2002
5
6
7
8
Years Since Final Close
2003
2004
9
2005
10
11
2006
Source:PitchBook
U.S. PE Cashflows Turned Positive in 2011 as the
Result of Strong Fund Distributions
U.S. PE Funds Annualized Cashflow ($B) by Year
$200
$150
Cashflow ($B)
$100
$50
$2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*
$(50)
$(100)
$(150)
$(200)
Distributions
Contributions
Net Cashflow
* As of 6/30/12
Source:PitchBook
European PE Performance Has Trailed the U.S. in
the 1-, 3-, and 5-Year Horizon Periods
Median Horizon IRR by Fund Location
35%
30%
25%
Median IRR
20%
15%
10%
5%
0%
-5%
1-year
3-year
5-year
10-year
-10%
All U.S. PE Funds
All European PE Funds
Source:PitchBook
The Last Several Years of European PE Vintages
Have Struggled to Match Earlier Performance
Average IRR by Vintage Year and Region
40%
35%
30%
Average IRR
25%
20%
15%
10%
5%
0%
-5%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-10%
All U.S. PE Funds
All European PE Funds
Source:PitchBook
Global PE IRR League Table
Source:PitchBook
Global PE IRR League Tables
Source:PitchBook
Global PE IRR League Tables Continued
Source:PitchBook
Venture Capital Fund
Returns
Venture capital fund performance has
been disappointing over the last
decade, but returns have improved
over the most recent 1-year and 3-year
time periods.
Source:PitchBook
$250 to $500 Million Funds Look to Be the Sweet
Spot for Venture Fund Performance
10%
Global Median VC Horizon IRR by Fund Size
8%
Median IRR
6%
4%
2%
0%
1-year
3-year
5-year
10-year
-2%
-4%
All VC Funds
Under $50M
$50M-$250M
$250M-$500M
$500M+
Source:PitchBook
More Than a Quarter of All VC Funds Raised
Since 2001 Currently Have a Negative IRR
Global VC IRR Quartiles by Vintage
20%
15%
Top Quartile
10%
IRR
3rd Quartile
5%
0%
2001
2002
2003
2004
2005
2006
-5%
2007
2008
2009
2010
nd
2 Quartile
Bottom Quartile
-10%
IRR 25th Percentile
IRR Median
IRR 75th Percentile
Source:PitchBook
Despite Slow Distributions, 2001 to 2010 Vintage
VC Funds Have an Average TVPI of at Least 1.0x
Global Average VC Fund Return Multiples By Vintage Year
1.8x
1.68x
Fund Return Multiples
1.6x
1.4x
1.2x
1.x
1.17x
1.18x
1.26x
1.12x
1.16x
1.21x
1.08x
1.12x
.45x
.48x
.93x
.76x
.91x
.6x
1.03x
1.02x
1.02x
.72x
.7x
.68x
.2x
.25x
.x
2002
2003
1.02x
.93x
.56x
.36x
2001
1.06x
.58x
.8x
.4x
1.22x
2004
DPI
2005
2006
RVPI
.19x
2007
TVPI
.19x
2008
.06x
.04x
.x
2009
2010
2011
Source:PitchBook
Fund Selection Proves to Be Critical in Venture Investing,
as Even Some 2nd Quartile Funds are in the Red
VC TVPI Quartiles by Vintage Year
1.6x
1.5x
1.4x
TVPI Multiple
1.3x
Top Quartile
1.2x
3rd Quartile
1.1x
2nd Quartile
1.x
.9x
Bottom Quartile
.8x
.7x
.6x
2001
2002
2003
TVPI 25th Percentile
2004
2005
2006
TVPI Median
2007
2008
2009
TVPI 75th Percentile
2010
Source:PitchBook
The Median Venture Fund Does Not Cross
the 1.0x DPI Threshold Even After 11 Years
Median VC DPI by Vintage Over Time
Distributed Over Paid In (DPI)
1.x
.9x
.8x
.7x
.6x
.5x
.4x
.3x
.2x
.1x
.x
2
3
2001
4
2002
5
6
7
Years Since Final Close
2003
2004
8
9
2005
10
2006
11
Source:PitchBook
Strong Distributions Have Kept U.S. VC
Cashflows Positive For VC Fund LPs since 2010
U.S. VC Annualized Cashflow ($B) by Year
$40
$30
Cashflow ($B)
$20
$10
$-
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012*
$(10)
$(20)
$(30)
$(40)
Distributions
Contributions
Net Cashflow
Source:PitchBook
Global VC IRR League Table
Source:PitchBook
Global VC IRR League Table
Source:PitchBook
Global VC IRR League Table Continued
Source:PitchBook
Performance Benchmarks by Fund Type
Source:PitchBook
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•
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•
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