Long-term private equity investments outperform liquid asset classes

European buyout funds continue to maintain a wide lead over public markets. The Invest Europe study The Performance of European Private Equity Benchmark Report 2024 shows a net IRR of around 15 per cent since inception for European buyout funds. By comparison, the MSCI Europe returned around six per cent during the same period. The difference of 865 basis points here confirms that active portfolio management creates value in the long term.

Mid-market buyout funds in the lead
With a net IRR of more than 17 per cent, mid-market buyout funds achieved the best performance within the segment, increasing their edge over the listed equity benchmark to 990 basis points. With an IRR of around 15 per cent since inception, European growth capital funds clearly outperformed the MSCI Europe’s 7.35 per cent.

A volatile phase followed by recovery
All segments picked up significantly in 2024, recovering from a challenging period. European buyout funds yielded an IRR of just under ten per cent, while growth financing funds and venture capital funds achieved 15 and 13 per cent respectively. This development reflects falling interest rates, reducing inflation and operational improvements at portfolio companies.

Overall, European buyout funds continued to perform on a par with their North American counterparts, while also beating funds from the rest of the world. They also lead the way in terms of capital distribution to investors by taking just 3.83 years on average to distribute to investors, almost a year earlier than their North American counterparts.

The full study is available on Invest Europe’s website at: https://www.investeurope.eu/research/performance-data/ (members only)