EVCA announces final performance figures

10 June 2004

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EVCA has also launched its final European private equity performance figures for 2003, showing a slight decrease on 2002 with annualised net returns of 9.9% across Europe, as compared with 10.8% in 2002. The final long-term performance figures, compiled by Thomson Venture Economics with the full co-operation of EVCA, are measured over the 24 years since 1980. This study is the 8th annual Investment Benchmarks Report on European private equity performance conducted by Thomson Venture Economics and EVCA and is based on the performance results of over 880 funds focused on European investments.

The five and ten-year investment horizon returns for the entire industry stood at 7.3% and 11.9% respectively. Buyout funds posted the strongest returns over the long term with 9.6% for the five-year investment horizon returns and 12.7% for the ten-year investment horizon returns. The five and ten-year horizon returns for venture capital were 2.3% and 8.3% respectively.

Although short-term returns continued to be negative, improvement over 2002 indicated a small but significant recovery. The one-year horizon returns for the total European private equity for the calendar year ended 31 December 2003 was -0.6%, compared to -9.2% in 2002. Buyout funds posted the strongest results over the short-term with a one-year horizon return of 1.6%, compared to -3.2% in 2002. The one-year horizon return in 2003 for all venture capital was -7.5%, compared to the one-year returns in 2002 of -30.7%.

The improvement in 2003 one-year returns as compared to 2002 show that private equity firms have been reviewing and streamlining their portfolios. In fact, 2003 saw fewer write-offs compared to 2002 and fund managers continued to support their most promising portfolio companies with follow-on investments. This suggests that the remaining portfolio companies and portfolios are in a healthier position and that performance may pick up soon.

Commenting on the 2003 final figures, Jean-Bernard Schmidt said: 'The improvement in short-term results along with a more favourable exit climate confirms the beginning of a small, but significant recovery. Overall, this environment gives us cautious optimism for better returns in 2004 and 2005.'