How Did 2005 – 2010 Buyout Funds Fare in H1 2013?

by Michael Roth

The beginning of a new year always has people reflecting on the previous year, and sometimes years. At Bison, we are in a unique position to be able track the private equity market from many angles. This allows us to analyze performance data for a broad cross-section of the fund universe.

Bison took a look at the 2005 – 2010 vintage years as they are at varying stages of the harvesting period. Since FAS 157 was implemented about six years ago, there have been conflicting views on how this would affect valuations and investors’ view of the PE industry. Looking at H1 2013 (admittedly a narrow view), buyout funds registered more muted returns than the US public markets but saw a bigger increase in value than the MSCI EAFE.

As the chart shows, North American buyout funds led the way with an average return of 4.0% and a median of 3.4%. This outpaced all other regions as well as the broad private equity market. Looking at the biggest gainers during the period, US funds had five of the ten largest increases in value. While this comparison provides a valuable snapshot of the market we should remember that private equity is a long-term asset class and short-term changes are not always the most meaningful.

Next week we will take a more in depth look at the biggest movers in the first half of 2013. If you would like to build your own comp sets based on the different investment styles and geographic regions, use the Bison Performance Analytics Tool to start slicing the data any way you’d like.

Note: The % change is calculated as follows: (^{Q2 2013 net multiple}/_{Q4 2012 net multiple}) – 1.