European buy-outs, growth, venture capital, infrastructure performance maintains lead over public market returns

• European Buy-Outs: 14.97% net IRR since inception vs. MSCI Europe benchmark of 6.07%

• European VC: 20.77% net IRR over 10 years; leads North America over 10 & 15 year time-horizons

Brussels, Belgium, 27 June 2024 - Invest Europe, the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors, today published ‘The Performance of European Private Equity Benchmark Report 2023’, its comprehensive report documenting European private equity returns. The study shows private equity’s continued strong outperformance of European listed equities over the long timeframes that matter to long-term investors, including pension funds and insurers.

• European buy-outs delivered 14.97% net Internal rate of return (IRR) since inception versus 6.07% for the MSCI Europe, representing an outperformance of 891 basis points - narrowing slightly from last year. Mid-market buy-outs delivered the best performance of the segment with net returns of 16.90%, increasing their lead over listed equities to 975 basis points. Overall, the European buy-outs segment continued to perform in line with North American funds, and exceed the performance of funds from the Rest of the World, illustrating the asset class’s quality and maturity in a global context.

• European venture capital yielded 20.77% net IRR over 10 years, and 16.57% net IRR over 15 years, eclipsing the performance of the North American peer group over the same time periods, demonstrating the strength of active funds investing in innovative European start-ups, as well as those funds raised, invested and divested since the end of the dot.com period.

• European growth capital produced 14.47% net IRR since inception, far ahead of the MSCI Europe’s 7.35%. Over multiple time-horizons up to 20 years, European growth capital funds delivered in excess of 15% net IRR, highlighting the consistency of established and developing funds alike.

For the first time, Invest Europe’s Performance Benchmark Report includes European private infrastructure funds, recognising the segment’s role in long-term investors’ allocations, delivering outperformance and diversification, as well as yield and stability. The segment created 8.86% net IRR since inception, over 500 basis points ahead of the MSCI Europe Infrastructure benchmark on 3.79%.

Eric de Montgolfier, CEO of Invest Europe, commented:

“The evidence is as incontrovertible as it is compelling: all segments of European private equity generate net returns well in excess of public market benchmarks. Private equity performance is measured not in months and quarters, but in years and decades, and on that basis it continues to prove itself as a consistent and essential part of the portfolio for European pensions and savings.”

“We are delighted to introduce European private infrastructure fund returns into our Benchmark Report, recognising the essential place of infrastructure has in investor portfolios and the importance of private infrastructure managers in a growing and representative Invest Europe.”

Invest Europe’s Performance Benchmark Report demonstrates the resilience of private equity returns during the ongoing uncertainty of 2023, impacted by high inflation, rising interest rates, and macro and geopolitical volatility.

Invest Europe’s Performance Benchmark Report 2023 delves even deeper into private equity fund performance with detailed analysis of returns from emerging managers versus developing managers and established teams. It also analyses the performance of active funds versus liquidated funds across all segments, supporting a picture of conservative valuations through recent market challenges, and details the time needed for funds to return capital to investors.

Members can click to download The Performance of European Private Equity Benchmark Report 2023.