Transcript THOMSON REUTERS PRESENTATION TEMPLATE

PRIVATE EQUITY PERFORMANCE
BENCHMARKS
FVCA SPRING SEMINAR, RUKA, FINLAND
DAVID BERNARD
23 APRIL 2009
INTRODUCING THOMSON REUTERS
We provide intelligent information to the world’s businesses and
professionals, giving our customers a competitive advantage.
Professional Division
$5.5 billion
23,100 employees
Markets Division
$7.9 billion
27,200 employees
Legal
Tax &
Accounting
Scientific
Healthcare
Investment
& Advisory
Sales &
Trading
Enterprise
Media
$3.5 B
$0.9 B
$0.6 B
$0.5 B
$2.4 B
$3.8 B
$1.3 B
$0.5 B
“We make
legal systems
work better”
“We reduce
complexity
and make
compliance
easier”
“We
accelerate
research,
discovery and
innovation”
“We improve
health
through
information
and insights”
We power the world’s markets
2008 Revenues
2
ThomsonONE.com
The premier source for comprehensive information for
private equity professionals
• Private equity investments, fund raising, portfolio company profiles, firm
profiles, limited partners
– Uncovering companies that may be ripe for a merger, acquisition or divestiture
– Identifying potential investors likely to support follow-on rounds
– Using coverage lists enabling you to monitor market and competitor activity
• Transaction details for PE investments, M&A, equity issues, bonds and loans
• Company financials for public and private companies, globally
• Real-time broker research from 1400 banks and independent research firms
• Broker estimates
• News from Reuters, PE Hub, EVCJ, PE Week, Venture Capital Journal,
Acquisitions Monthly, Buyouts – tagged to the database
• And much more
3
THOMSON REUTERS’ PRIVATE EQUITY
PERFORMANCE DATABASE
•
Maintained by Thomson Reuters (formerly known as Thomson Venture
Economics) since 1988, online since 1991
•
Available online in Thomson ONE and VentureXpert, where you can define
your own performance sample (by country, vintage, size, focus, etc.)
•
1971 US funds formed 1969-2008, in partnership with NVCA
•
1310 European funds formed 1979-2008, in partnership with EVCA
•
191 Canadian funds formed 1981-2008, in partnership with CVCA
•
140 Asia-Pacific funds formed 1980-2008
•
82 funds of funds
•
Thomson Reuters has long-standing relationships with national and
regional Private Equity and Venture Capital Associations worldwide
4
5
SOURCES
• ~50% from GPs upon request from LPs who contract our
benchmarking services
• ~50% from GPs who need data for their own benchmarking and
fund raising needs
• Since we get data from LPs in addition to GPs there is not a
consistent or significant self reporting bias
• We calculate IRR ourselves (we do not use self-reported IRRs)
based on the underlying cashflows, and we verify against general
partner financial reports to LPs
• We treat confidentiality very carefully – all data reported is strictly
anonymous
6
PRINCIPAL MEASURES
•
Cumulative IRR Since Inception
•
Cumulative Realisation Multiples
•
Time Weighted Return
•
Investment Horizon Return
•
Monthly Cash Flows
•
Public Market Comparables – Index method
7
EUROPEAN PRIVATE EQUITY
CUMULATIVE IRR BY VINTAGE YEAR AS OF 31-DEC-08
60
VC funds
Buy-out funds
20
0
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
Net IRR Since Inception (%)
40
-20
-40
-60
Vintage Year
-80
J-curve
effect?
Source: Thomson Reuters / EVCA
8
US PRIVATE EQUITY
CUMULATIVE IRR BY VINTAGE YEAR AS OF 31-DEC-08
100
VC funds
Buy-out funds
60
40
20
20
08
20
06
20
04
20
02
20
00
19
98
19
96
19
94
19
90
19
88
19
86
-20
19
92
.
0
19
84
Net IRR Since Inception (%)
80
-40
-60
Vintage Year
Source: Thomson Reuters / NVCA
9
EUROPEAN PRIVATE EQUITY FUNDS FORMED 1980-2008
NET RETURNS SINCE INCEPTION AS OF 31-DEC-2008
Stage
Number
Pooled IRR
Average DPI
IRR Standard
Deviation
Early Stage
346
-1.2%
0.42
23.1%
Balanced
201
3.3%
0.51
28.6%
Development
219
8.7%
0.83
29.2%
All Venture Funds
761
3.1%
0.54
26.6%
Buy-outs 0-$250m*
263
12.3%
1.16
27.7%
Buy-outs $250m-$500m
63
17.9%
1.24
26.8%
Buy-outs $500m-$1bn
48
18.2%
1.19
27.9%
Buy-outs $1bn+
50
10.3%
0.72
24.8%
All Buy-Out Funds
425
13.6%
0.88
27.4%
Generalist
120
9.1%
1.02
18.9%
1310
10.0%
0.85
26.7%
All Private Equity Funds
* fund size
Source: Thomson Reuters / EVCA
10
US PRIVATE EQUITY FUNDS FORMED 1969-2008
NET RETURNS SINCE INCEPTION AS OF 31-DEC-2008
Stage
Number
Pooled IRR
Average DPI
Standard
Deviation
Seed Capital
68
9.3%
0.98
33.7%
Early Stage
536
19.7%
1.14
60.1%
Balanced
456
13.6%
1.17
24.5%
Later Stage
206
13.3%
1.17
26.9%
All Venture Funds
1266
15.3%
1.15
43.9%
Buy-outs 0-$250m*
182
15.5%
1.32
22.2%
Buy-outs $250m-$500m
116
17.1%
1.24
20.7%
98
11.8%
1.05
18.7%
Buy-outs $1bn+
138
9.3%
0.71
22.5%
All Buy-Out Funds
534
11.2%
0.83
21.7%
Generalist
38
9.4%
0.63
19.9%
Mezzanine
72
8.0%
0.85
9.8%
1971
12.6%
0.91
37.3%
Buy-outs $500m-$1bn
All Private Equity Funds
* fund size
Source: Thomson Reuters / NVCA
11
IRR SINCE INCEPTION AND MULTIPLES
Sample
size
Pooled IRR since inception
All
funds
Venture
funds
Buyout
funds
Upper
quartile
Pooled
DPI
Pooled
RVPI
Pooled
TVPI
Finnish funds
127
9.4%
-5.0%
24.0%
10.5%
0.85
0.46
1.32
Nordic funds
220
12.7%
-0.7%
27.5%
9.3%
0.80
0.62
1.42
European funds
1310
10.0%
3.1%
13.6%
9.8%
0.85
0.49
1.34
US funds
1971
12.6%
15.3%
11.2%
14.8%
0.91
0.51
1.42
Source: Thomson Reuters
Note: Data is continuously updated and is therefore subject to change. Nordic includes Norway, Sweden, Finland and Denmark.
Calculation in € for European funds, in US$ for US funds, as of 31/12/2008
12
EUROPEAN PRIVATE EQUITY FUNDS FORMED 1980-2008
NET INVESTMENT HORIZON RETURN AS OF 31-DEC-2008
1-year
3-year
5-year
10-year
20-year
Early Stage
-16.2%
-2.2%
-0.4%
-2.6%
-1.2%
Balanced
-19.2%
1.6%
2.6%
0.6%
3.3%
Development Stage
-17.9%
0.3%
4.2%
4.1%
8.9%
All Venture Funds
-18.9%
-0.2%
2.0%
0.3%
3.1%
Buy-outs 0-$250m*
-23.6%
5.4%
8.2%
9.4%
12.3%
Buy-outs $250m-$500m
-19.7%
10.2%
15.5%
18.7%
16.7%
Buy-outs $500m-$1bn
-15.8%
11.6%
11.5%
19.7%
18.2%
Buy-outs $1bn+
-31.3%
3.9%
13.1%
10.4%
10.3%
All Buy-Out Funds
-30.0%
5.7%
12.4%
12.4%
13.5%
-9.5%
5.5%
7.9%
8.0%
9.2%
-28.8%
4.3%
9.3%
8.7%
10.0%
Generalist
All Private Equity
* fund size
Source: Thomson Reuters / EVCA
13
US PRIVATE EQUITY FUNDS FORMED 1969-2008
NET INVESTMENT HORIZON RETURN AS OF 31-DEC-2008
1-year
3-year
5-year
10-year
20-year
Seed/Early Stage
-20.6%
1.7%
3.7%
36.0%
21.8%
Balanced
-26.9%
4.6%
8.4%
13.5%
14.5%
-6.8%
9.5%
8.7%
7.5%
14.5%
All Venture Funds
-20.9%
4.2%
6.4%
15.5%
17.0%
Buy-outs 0-$250m*
-11.0%
2.6%
7.5%
4.6%
12.2%
Buy-outs $250m-$500m
-20.6%
7.4%
11.3%
7.9%
11.3%
-9.6%
5.3%
10.9%
6.6%
10.9%
Buy-outs $1bn+
-24.9%
1.1%
7.6%
5.5%
8.7%
Buy-Out Funds
-23.9%
2.2%
8.4%
5.9%
9.8%
6.6%
3.5%
4.2%
4.8%
7.5%
-23.6%
3.4%
7.9%
7.9%
11.9%
Later Stage
Buy-outs $500m-$1bn
Mezzanine
All Private Equity
* fund size
Source: Thomson Reuters / NVCA
14
INVESTMENT HORIZON PERFORMANCE
1-year
Finnish funds
3-year
5-year
10-year
20-year
-18.1%
9.4%
14.1%
9.7%
9.4%
Finnish venture funds (71 funds, €1.6bn)
-23.8%
-3.6%
-2.2%
-5.5%
-5.0%
Finnish buyout funds (36 funds, €2.8bn)
-13.2%
15.1%
21.6%
26.4%
24.0%
Nordic funds
-24.6%
10.0%
9.5%
13.6%
12.7%
European funds
-28.8%
4.3%
9.3%
8.7%
10.0%
US funds
-23.6%
3.4%
7.9%
7.9%
11.9%
Source: Thomson Reuters
Note: Data is continuously updated and is therefore subject to change. Nordic includes Norway, Sweden, Finland and Denmark.
Calculation in € for European funds, in US$ for US funds, as of 31/12/2008
15
PRIVATE EQUITY AND PUBLIC MARKET
COMPARATORS
Net Pooled IRR Since Inception to the End of Each Year
20
Morgan Stanley Euro Equity
HSBC Small Company
JP Morgan Euro Bonds
European Private Equity
15
IRR (%)
10
5
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
0
-5
-10
*Comparators are Internal Rates of Return (IRR). IRRs for public market indices are calculated by investing the equivalent cash
flows that were invested in private equity into the public market index. Then an equivalent IRR is calculated for each index.
Source: Thomson Reuters
16
FOR MORE INFORMATION
David Bernard
Vice-President – Investment Banking & Private Equity
[email protected]
+33 6 87 97 87 81
Rosette Tyers
Private Equity Research Manager - EMEA
Data contributions & surveys
[email protected]
+44 20 7542 9066
17