17 Jun 2020

BVCA statement on fund performance

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There is considerable evidence that private equity investment returns have consistently outperformed the public markets. The claims recently made by Professor Ludovic Phalippou about private equity performance are misleading as discussed by the AIC in their response to Professor Phalippou’s claims – available here. Below we explore the subject based on data collected by the BVCA.

In the UK, the BVCA has collected annual fund performance data since 1992 and our records go back to 1980. This data is collected directly from BVCA members who manage independent funds in or from the UK, and all returns quoted are net of all fees.

We present the extensive information fully in our annual Performance Measurement Survey, together with full details of the methodology we use. The most recent BVCA report is available here.

The primary method for calculating returns is the annualised internal rate of return (IRR), but we also report fund multiples, both DPI (the total amount distributed to investors as a percentage of paid-in capital) and TVPI (the total amount distributed plus the residual value attributable to investors as a percentage of paid-in capital).

We report performance data for all vintage years, we show the data across different fund strategies, and we show the dispersion of returns as well as the median. We benchmark to both the FTSE 100 and the FTSE All-Share, as the best-known public market indices in the UK; however, users of the report can compare to any other benchmark they choose.

As shown in our most recent report1, independent private equity and venture capital funds managed from the UK by BVCA member firms have consistently outperformed the FTSE 100. For example, over the 10 years between 2008 and 2018, private equity and venture capital generated a pooled return of 13.7% IRR, significantly higher than the 9.1% the FTSE All-Share returned to investors and the 8.3% by the FTSE 100.

Given its long-term nature, a more appropriate metric of assessing performance is over the full lifecycle of a fund – known as since-inception – and here the results are equally impressive, with an IRR of 14.6% as of 31 December 2018 (the chart below shows how this has varied by vintage year). In comparison, investing in the FTSE 100 between 1984 and 2019 would have generated a return - assuming dividends were reinvested immediately - of 7.75% (see here for more details).

The many sophisticated investors who invest in European private equity and venture capital funds do so because these funds make an important contribution to their portfolio. As well as diversifying risks, they also make a significant contribution to returns for the benefit of millions of pensioners and other savers. At the same time, there is also considerable academic evidence that private equity firms working in partnership with the companies they back, improve them for the benefit of their employees, customers and other stakeholders.




For further information, please contact

Tom Allchorne, Director, Communications, BVCA
+44 (0)20 7492 0407
[email protected]


Notes to Editors
  1. The BVCA Performance Measurement Survey 2019 can be found here

  2. The British Private Equity & Venture Capital Association (BVCA) is the industry body for the UK private equity and venture capital industry. The BVCA has over 800 member firms, including more than 500 fund managers and institutional investors.


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