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Private Equity

Western Europe leads private equity returns, while U.S. on top for venture capital – report

U.S. funds have delivered the highest returns since 1991 for venture capital, while Western European strategies came out on top for private equity funds over the same period, research shows.

Alternative investment technology firm eFront's research looked at 4,000 strategies around the globe and found U.S. venture capital funds recorded an internal rate of return of 14.37% from 1991 to present. Specific dates could not be learned by press time.

That compared with China-based venture capital funds with an IRR of 11.53% over that period, and 5.32% for Western Europe funds.

Looking at returns since 2001, eFront said the playing field is more level.

U.S. funds with vintage years 2003 to 2007 generated an IRR of 9.3%. Strategies with vintage years 2008 to 2012 recorded an IRR of 14.3%.

However, when it comes to private equity funds, Western European funds were on top with an IRR of 14.32% since 1991, compared with 12.17% for U.S. funds.

That equated to an overall return of 1.68 times total value to paid in for Western European funds, vs. 1.56 times for U.S. funds.

Within Europe, Nordic-based private equity strategies came out on top with 1.91 times TVPI returns, followed by Benelux funds at 1.85 and U.K. funds at 1.62.

However, for overall private equity and venture capital performance, China led the way at 1.67 times TVPI, followed by 1.65 for the U.K. Further details could not be learned by press time.

"Private markets do not offer precise or timely information, and the nature of closed-ended funds introduces other complexities," eFront CEO Tarek Chouman said in a news release accompanying the research. "These challenges are opportunities for those willing to invest the time in truly understanding the idiosyncrasies and stages of evolution in different geographic markets."

The research is available for download on eFront's website.