Post on 23-Aug-2020
From 2000 to 2012 capital calls were significant However on a net basis since 2013 secondary funds no longer support significant
upfront net capital deployment as the distributions have outpaced capital calls
Secondaries come short of providing greater exposures in short run
Read Full Paper
Quarterly capital calls and distributions of secondary funds Source eFront Insight
Featured Alternative Markets Insights
Read Full Paper
Read Full Paper
Q3 and Q4 2018 have shown a global stabilization of the performance of active LBO funds
2019 appears in that respect as a crossroad One direction points towards further performance stabilization thus indicating robust sector
health Another is the initiation of a downward trend of performance
Golden year In 2018 the performance of LBO funds stabilizes at levels fairly close to the records set in 2017
Return evolution of active LBO funds Source eFront Insight
While investors perform very well across a number of key metrics their sophistication score sits below half marks in six of the ten skill
categories studied
LPs are least inclined to adopt the best practices in position monitoring information exchange and negotiation
Read Full Paper
Better than you think as an LP you can expect gt70 of your GPs to provide gt70 more information to youTop quartile LPs can expect gt70 of their GPs to conform with their reporting templates requests
Conformant funds (using reporting templates ndash RT) provide almost 20 more of the total required information than non-conformant funds (using quarterly report non-standardized documents ndash QR)
Of conformant funds the top quartile funds provide 71 more information than the average non-conformant fund
Completion rate for the all non-conformant funds all conformant funds
and a top quartile conformant fund
Source eFront Insight
GP conformance rate achieved by LPs
by quartiles
There seems to be an inverse correlation between the amount of capital deployed in Year 1 and the overall performance of funds (-032)
The same direction movements occur exclusively in the years that follow the recessions
Deploying capital early is negatively related to fund performance
Read Full Paper
TVPI and 1-year PICC of US LBO funds (vintage years 2000-2010) Source eFront Insight
In 2018 the performance of LBO funds stabilizes at levels fairly close to the records set in 2017
LPs are least inclined to adopt the best practices in position monitoring information exchange and negotiation
LPs can expect gt70 of their GPs to provide gt70 more information to them
Deploying capital early is negatively related to fund performance
PE funds struggle to deploy capital at the same pace they raise it
Small LBO funds return cash to their investors earlier than their mega funds peers
Distressed debt funds perform better when macroeconomic conditions are challenging
Secondaries come short of providing greater exposures in short run
All Highlights
wwwefrontcom
The main bottleneck for private equity to continue to thrive is
not so much on the fundraising side but on the sourcing side
Making new investments can be challenging at the current time
not only because of high asset prices but also because of rising
competition from corporates who tend to be willing to spend
more because of expected synergies
Read Full Paper
PE funds struggle to deploy capital at the same pace they raise it
Small US LBO funds are more prone to recycle early distributions back into new deals which partially explains them overperfoming
mega US LBO funds
Small LBO funds return cash to their investors earlier than their mega funds peers
Read Full Paper
Cumulated cash-flows of US LBO funds by size of deals Source eFront Insight
Private equity investors cannot reasonably expect to time the market and only invest in distressed debt prior to recessions but including these
funds even when macroeconomic conditions are benign ends up being rewarding
Read Full Paper
Distressed debt funds perform better when macroeconomic conditions are challenging
1
11
12
13
14
15
16
2010 2011 2012 2013 2014 2015 2016 2017 2018
TVPI
QUARTER
063
060
058
051
049
044
042
037
036
030
0 01 02 03 04 05 06
Return metrics
Risk management
Private equity allocation
Manager selection and diligence
Liquidity targets
Negotiation
Portfolio construction
Performance benchmarking
Reporting and information exchange
Position monitoring
Proficiency ScoreCompetency area Source eFront Insight
Global private equity capital calls and distributions by quarter Source eFront Insight
00
05
10
15
20
25
30
35
40
45
50
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
PER
CEN
TAG
E O
F TH
E FU
ND
SIZ
E
QUARTERCapital Calls Distributions
Pooled average TVPI RVPI and DPI of distressed debt funds by vintage year Source eFront Insight
0
1
2
3
4
5
6
7
8
9
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20172018
Capital Calls Distributions
0
1
2
3
4
5
6
7
8
9
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 20172018
Capital Calls Distributions
QUARTER
O
F F
UN
DS
SIZ
E
-100
-50
0
50
100
150
200
250
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
Year9
Year10
Year11
Year12
Year13
Year14
Year15
Year16
Year17
Year18
CUM
ULA
TED
CA
SH F
LOW
S
QUARTERMega Large Medium Small
-100
-50
0
50
100
150
200
250
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
Year9
Year10
Year11
Year12
Year13
Year14
Year15
Year16
Year17
Year18
CUM
ULA
TED
CA
SH F
LOW
S
QUARTERMega Large Medium Small
198
107 108 127102
137090 089
055 057 055
007
107
000
044 024031
031
037
034058
072 076 085
112
040
000
050
100
150
200
250
2001 2004 2005 2006 2007 2008 2009 2010 2011 2012 2014 2015 All
TVPI
DPI RVPI
198
107 108 127102
137090 089
055 057 055
007
107
000
044 024031
031
037
034058
072 076 085
112
040
000
050
100
150
200
250
2001 2004 2005 2006 2007 2008 2009 2010 2011 2012 2014 2015 All
TVPI
DPI RVPI
VINTAGE YEAR
Top eFrontResearch Findings
0
05
1
15
2
25
0
5
10
15
20
25
30
35
40
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
TVPIPI
CC
VINTAGE YEAR
Year 1 (lhs) TVPI (rhs)
820
41
Bottom Quartile LP
52
Median LP
72
LabelTop Quartile LP RT average completion rate
82
48
RT top quartile completion rate
QR average completion rate
65
+71
page1
page2
page 3
page 4
page 5
page 6
page 7
page 8