The Pulse of Private Equity – 9/8/2014

Going back several quarters, larger PE funds have performed better than smaller funds, generally speaking. Funds of at least $1 billion outpaced smaller size buckets across the 1-, 3-, 5- and 10-year IRR horizons through 4Q 2013, which was also the case in the previous quarter. What’s interesting is that, despite the relative underperformance of smaller PE funds, LPs have begun to shift more toward middle-market and lower-middle-market funds over the last few quarters. Through 1H 2014, 37% of all fund closings this year have been for sub-$100 million funds, compared to just 25% in 2008. The outperformance of larger funds have made smaller vehicles look less competitive and less expensive than larger funds, particularly given the valuations at the upper end of the market.

Contact: Alex Lykken
alex.lykken@pitchbook.com