Private equity returns are improving, but still lag behind those of the public markets, based on a one-year period.
The latest data from London-based Preqin, an alternative investment research group, stretches up to the end of 2009. It shows the overall private equity horizon internal rate of return for 2009 was 13.8 per cent. That compares to -9.2 per cent in the third quarter, and -27.6 per cent at the fourth quarter of 2008.
As of the end of the year, all private equity strategies were posting positive one-year returns. The highest came from buyout strategies, whose 16.7 per cent IRR pulled up the industry and far surpassed the 5 per cent showing from venture capital and the 2.3 per cent showing from mezzanine investments.
Private equity's performance has been improving since the second quarter of 2009.
"Although private equity is being outperformed by the public markets over the short term, over the long term private equity is providing strong returns, confirming the long-term attractiveness of the asset class," Preqin's report concluded.