Mega-Buyout Funds Poised for Growth

Posted Jan 15th 2010 10:30AM by Tom Johansmeyer
Filed under: Private Equity

Mega-buyout funds are turning in their worst returns over one-, three- and five-year periods. Large buyout funds haven't performed well either, with small buyout funds faring best, according to alternative investment research firm Preqin. With enough time having passed from the financial market mayhem of the third quarter of 2008, it's now possible to gain some perspective and measure the results.

Mega-buyout funds' returns were negative over the past year, down 31.4%. Over the last three years, returns were still negative at 3.1%. But over the last five years, mega-buyout funds returns a solid 23.9%.

Large buyout funds did better than their bigger counterparts, but still delivered a one-year decline of 24.4%. Over three years, the large sector's return was actually positive at 9.9%, with the five-year period return at 23.7%.

But the best performers were small buyout funds, posting the smallest negative return the past year, down 12.9%. And over the past three years, they managed a positive return of 18.6%. But, over the five-year period, they only returned 21.5%.

Since the third quarter of 2008, all sectors in the buyout class have seen declines in valuations. Preqin says that the market's bottom has been reached and fund values are improving. Mega-buyout funds posted their highest increase, 5.7%, in the second quarter of 2009. This largest category was hit hardest by the financial crisis.

Tags: buyout, buyout financing, buyout funds, BuyoutFinancing, BuyoutFunds, buyouts, inthenews, Preqin

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Reader Comments (Page 1 of 1)

1-15-2010 @ 12:42PM

BHarrison said...

Isn't it apparent that there is very little real INTEGRITY in the stock markets. The insiders (esp. the Hedge funds) make horrific profits out of market manipulations. It all is mostly a charade to suck in the samll investors, retirement funds, etc. Then they skim a horrific percentage off of the top as their profit. There cannot be any real economic recovery until reasonable and prudent regulations and controls are implemented to restore INTEGRITY to the markets. These ultra wealthy special interests groups and their complicit Congressmen are resisting any efforts to restore real integrity to the markets and the financial institutions.