For this, data is collected from all of our GP members on their aggregate fund performance and is used to produce the most comprehensive overview of the UK’s private equity and venture capital markets available. The survey captures the performance of UK managed funds, including independent funds, venture capital investments and MBOs, representing a vast majority of the UK PE industry and making the dataset and analysis rich and robust.
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While challenges remain in the UK economy, such as low productivity and continued political uncertainty, the UK’s private equity and venture capital industry has demonstrated its resilience by continuing to deliver substantial amounts of cash distributions to investors. Over the longer term, private equity continues to comfortably outperform public markets. The overall since-inception return has been steady, increasing to 14.5% in 2017 and demonstrating significant levels of stability in overall returns.
The BVCA Private Equity & Venture Capital Performance Measure Survey, produced in association with PwC and Capital Dynamics, is the most detailed and comprehensive study of its type. Drawing on a direct survey of the BVCA’s eligible members the survey contains information on 629 UK-managed funds, and we believe this makes it the most complete country-specific survey on the performance of private equity and venture capital in the world.
Over the past decade, UK private equity has generated returns of 11%. This is in line with the previous year and greater than that of the FTSE All-Share, which generated returns of 6.3%. Despite its status as a long-term asset class, private equity has also outperformed over the short- and medium-term, producing three- and five-year annual returns of 21.2% and 17.8%, respectively, compared to the FTSE All-Share which returned 10.1% and 10.3% to investors over the same respective time periods.
Buyouts have continued their relatively confident performance, with stronger returns than in 2016. Small buyouts have remained the strongest performers, with a since-inception IRR of 16.7%. Large buyouts have also seen an increase on a since-inception basis, with their IRR increasing to 15.6%.
Venture capital funds on the whole have continued to improve over the short and long-term, with the five and ten year IRRs for venture up from 11.1% to 13.6% and from 6.2% to 6.6% respectively.
The growth of venture capital along with the increasing returns from Small MBO funds highlight the importance of this industry in providing capital to developing firms and the key role this plays in the UK’s economy.
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