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UK private equity funds have outperformed both the stock market and UK pension funds over the ten years up to the end of 2007, according to the 2007 Performance Measurement Survey summary results published by the British Private Equity and Venture Capital Association (BVCA) in conjunction with PricewaterhouseCoopers LLP and Capital Dynamics.

The private equity industry recorded ten-year returns of 20.1 per cent compared with 6.2 per cent for the FTSE All-Share index and the 7.1 per cent average return from total pension fund assets.

Looking at fund returns since inception, the overall net return to investors now stands at 17.3 per cent on funds raised between 1980 and 2003. This is the third year in a row that returns since inception have increased.

Simon Walker, chief executive of the BVCA, explains that private equity is all about providing long-term capital to business, which is why returns over the long-term are what really count.

He adds that these excellent performance figures show why so many pension fund trustees and other institutional investors want to invest in private equity.

“We are keen to encourage more investment that will benefit UK pensioners directly. The BVCA 2006 Report on Investment Activity indicates that UK Pension Funds invested £2.1bn, or 6 per cent of total funds raised; compare that with overseas pension funds investing £8bn, or 23 per cent of funds raised,” Walker says.

Ashley Coups, a director at PricewaterhouseCoopers, says that the latest performance figures show strong performance across the range of buyout funds and the good performance has continued for funds raised in 1999, 2000 and the early part of the new millennium.

“UK private equity continues to outperform the FTSE All-Share and other principal FTSE indices including the FTSE 100, 250 and SmallCap indices over the medium to long term," according to Coups.

The latest performance figures show a sharp increase in returns measured over a three year period but this partly reflects the changing composition of BVCA membership since a number of large buyout houses joined the organisation.

The returns over ten years or since inception give a more accurate indication of the long-term trends.

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Related links

• BVCA
• PricewaterhouseCoopers
• Capital Dynamics