Pantheon Ventures has released a study of nearly 700 private equity and venture capital funds to determine whether there is an inflection point in a fund's life where expected value creation and distributions become negligible relative to the fund's total value that it has already achieved. The study "Residual Value in Mature Private Equity Funds" is very thoughtful and has some interesting findings:
This is a very good research effort, and I recommend it.
Link to Pantheon's website: http://www.pantheon.com/
Link to the study page: http://www.pantheon.com/news-publications/534-replicating-investment-strategy
Link to the study .pdf: http://www.pantheon.com/images/stories/pdfs/residual_value_in_mature_private_equity_funds.pdf
- By year nine, the median fund had generated 96% of its total gain when measured by Total Value to Paid-in-Capital (TVPI) and had generated 80% of its distributions.
- There was no statistically significant evidence that venture funds behaved differently than buyout funds, although the degree of dispersion in the TVPI profiles was greater for venture funds.
- The results were generally not skewed by any specific vintage or associated market conditions.
- Lower-quartile funds funds in the study (compared to top and second quartile funds) were late bloomers, and more of the total value creation and distributions occurred later than the top and second quartile funds.
This is a very good research effort, and I recommend it.
Link to Pantheon's website: http://www.pantheon.com/
Link to the study page: http://www.pantheon.com/news-publications/534-replicating-investment-strategy
Link to the study .pdf: http://www.pantheon.com/images/stories/pdfs/residual_value_in_mature_private_equity_funds.pdf
