It is not always easy to learn about the kind of strategies and funds that are winning in private equity. But the sources of information are increasing. For example, the Deal Pipeline profiled an up and coming PE fund manager, called American Securities. It has a low risk, low leverage strategy and a recent stellar IRR that has made it possible to fundraise quickly compared to peers.
Citing Preqin data, American Securities’ fifth fund, raised in 2008, has achieved the second-highest return among global 2006 to 2008 vintage funds raised at the peak of the LBO boom. Its 52.1% net internal rate of return was second place to the 53.9% net IRR of the maiden fund of Australia’s Anacacia Capital Pty. Ltd. As a result of its outperformance, American Securities relatively quickly attracted USD 3.64 billion in commitments for its sixth vehicle, which closed in March, reports The Deal Pipeline. And it did so without altering its terms or fees.
Other funds that have made strides in raising new capital without adjusting fees, according Bloomberg Private Equity Briefs, include Apax and Nordic Capital.
Another source for this kind of performance information is data provider Preqin. It recently published a research note based on its Performance Monitor data service. The sample data lists the top 5 consistently outperforming buyout funds over three or four funds.
The top three managers are Altor, Lovell Minnick Partners and Southern Cross Group (all three funds are top quartile) and the next two are Israeli-based FIMI and Netherlands-based Waterland with three funds in the top quartile and 1 each in second quartile. The graphic above from the same research newsletter offers some insight into which types of fund strategies are performing well at the moment. (Image Source: Preqin)