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Historical distributions of IRR in private equity

Before investing in any asset class, institutional investors need to know its historical performance to gauge the benefits of such an investment. Barry Griffiths of Goldman Sachs' Private Equity Group analyses the performance of private equity using IRR as a measurement.

The study covers both liquidated and unliquidated funds. Findings suggest that average returns in private equity may not outperform the long-term average return of the public equity markets. Also, available data suggests that approximately 15-20 per cent of managers have final internal rates of return that are zero or negative. On a more positive note, a similar number of managers, about 15-20 per cent, exceed 20 per cent net IRR.

Copyright © 2002 Goldman Sachs Asset Management

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