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Buyout Fund Investing –Achieving Real Returns?

The latest CEPRES Private Equity Buyout analysis shows the IRR spread between top performing funds and the market median has significantly increased since the GFC.

Investing in Non-sponsored Private Debt:
What investors need to consider

Read CEPRES’ latest analysis, and find out what investors need to consider before investing in Non-sponsored Private Debt.

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Private Capital Markets Outlook 2019 Q2

US buyout fundraising activity increased by more than 10%, reaching its highest quarterly volume. This robust fundraising activity coincides with the overall increase in US buyout entry EBITDA pricing multiples.

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Pricing and leverage of private credit markets and how well GPs are creating value

CEPRES latest analysis based on 712 private credit funds encompassing $3.4 Trillion of PD-backed companies. Find out more about pricing and leverage of private credit markets.

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Will the Technology Sector Always be a Winner?

Discover why Technology Investments are the new focus for GPs across multiple investment stages. Private market deals have delivered substantial returns over the last decade, achieving 29% pooled gross internal rate of return (IRR) based on a transaction level analysis of 69,904 private investments from CEPRES PE.Analyzer. 

Technology Sector
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How to compose a Private Equity Portfolio today?

Understanding the Value Creation Bridge

Get access to the latest analysis by Dr. Daniel Schmidt, CEO & Managing Partner at CEPRES, about understanding the Value Creation Bridge and how Enterprise Value is created during the fund’s holding period.

Value Creation Bridge
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LP Co-Investments in a Portfolio Context

Discover Co-Investment outcomes in world’s largest ever study! CEPRES proudly presents the world’s largest ever analysis of LP Co-Investments based on 4,659 Co-Investments. Read all of our findings here!

Co-investment Activity and returns by Year
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Empower Due Diligence through the Digitization of Investment Work Flows

An Empirical Study of North American Private Equity

Beyond upside returns and downside losses, we were able to identify whether a company was providing healthy and sustainable investment opportunities by analyzing value creation drivers in Operating Metrics.

Multiple Spread after Global Financial Crisis
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Implementing a risk-return optimized private markets portfolio

Stage 5

In our last essay of the series, we are looking at the last phase of the private capital investment lifecycle: Portfolio Monitoring and Management.

The private capital investment life cycle goes through a continuous feedback cycle, and the development of an optimized portfolio over time is based on the critical and constant target-performance comparison.

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Implementing a risk-return optimized private markets portfolio

Stage 4

At this point of the due diligence process, a fund that has come this far along is already considered a compelling investment opportunity because, at any point in time when serious negative factors are discovered from any previous analysis, an LP would indicate a decline decision to the GP to avoid burning additional time and resources.

Alpha Beta Analysis of Deal TR vs PME of a Global Equity Index
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Implementing a risk-return optimized private markets portfolio

Stage 3

We are now at the second stage of the quantitative due diligence process and will examine how a deal level due diligence is performed to uncover the actual risk and return drivers of a track record.

TVPI performance attribution by investment year
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Implementing a risk-return optimized private markets portfolio

Stage 2

There are thousands of GPs in the market, and hundreds of them are in fundraising at any given moment, so it is imperative for LPs to stay focused on opportunities that potentially fit the asset allocation plan and investment strategy. The key to an LP’s success in the fund underwriting phase is to conduct thorough due diligence that shows a strong audit trail of decision parameters but can be completed with efficiency. Achieving this goal leads to a deep understanding of a GP’s previous performance that guides LPs to informed and evidence-based investment decisions without sacrificing internal resources that need to be shared across the other stages of the Private Markets Investment Lifecycle.

J-Curve Analysis on CEPRES platform
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Implementing a risk-return optimized private markets portfolio

Stage 1

In this series of CEPRES Essays, we will focus on the practical steps that investors can take to build an investment framework and process, or for experienced LPs, further, refine existing processes in order to achieve an optimized portfolio.
The private markets investment lifecycle
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Private Debt in the environment of the most important markets – USA and Europe

“Data driven approach – Private Debt a maturing asset class?”

Get access to the exclusive analysis presented at the SuperReturn Private Credit by Marc Dellmann, Head of Business Development at CEPRES about how to generate investment returns in a maturing Asset Class and make decisions based on empirical proof.

Private Debt Fund Net IRR & Net TVPI comparison by investment era
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Competing in a Saturated Fundraising Environment

With mega funds on the rise we dove into our market data to investigate whether a paradigm shift is taking place, or whether it is merely a fad. Should LPs still consider mid-market or emerging managers, can GPs compete against industry giants? Read all of our findings here!

Deal EBITDA Margin at Entry by Investment Year
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2019 CEPRES Private Debt Report now available

The latest CEPRES Private Debt Report is the single source of the truth for private debt transactions. It covers deals from 679 funds and is available now to CEPRES Subscribers. Find out the latest on deal returns, debt pricing, loss rates, leverage multiples and more. Subscribers contact CEPRES for your copy or check out the teaser.

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Private Capital Markets Outlook 2018 Q3

With recent market volatility, fundraising volumes declining and peak market pricing, find out how the current economic environment is shaping private markets for the end of the year.

CEPRES latest research and Market Data provides you insights to help shape your investment thinking for 2019.

Market Research US Buyout Pricing EV to EBITDA at Entry
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Private Debt Cycles Analysis

Private Debt in the Crisis

CEPRES’ CEO Dr. Daniel Schmidt, presented at the SZ-Specialist Conference: Private Debt and Direct Lending in Frankfurt am Main the latest investment intelligence: Private Debt Cycles Analysis.

  • Loss rates are significantly lower than in the past: this stabilizes the returns, even though interest levels are lower in Direct lending (especially in Europe)
  • Market has changed especially in Europe from mezzanine to direct lending focus
  • Total Interest is not the most relevant factor that impacts the return
  • Default and Loss rates decide on final returns levels
EU Private Debt Invested Capital and EU Private Debt Invested Capital
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Asia Private Equity Returns & the Underlying Drivers

Journey beyond the surface using disruptive data & technology for powerful investing

Mr. Simon Tang, CEPRES’ Partner and Head of Asia, presented at Outperform Asia in Hong Kong latest CEPRES: Asia Private Equity Returns & the Underlying Drivers. Read and learn more about the Asia Private Equity Returns and the journey beyond the surface using disruptive data & technology for powerful investing
Asia Deal Level Returns - Gross IRR by Investment Stage
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Private Equity in Current Market Conditions

Private Equity Valuations for Buyers and Sellers

We saw how the market dynamics have changed post-GFC and pure multiple expansion is no longer a reliable driver of value creation and investment returns. Further buy: sell multiple compression is still a risk and fund managers and investors should be looking for high growth companies in sectors with strong fundamentals and positive investor sentiment to mitigate this risk. Significant value creation and investment returns are still being generated through strong Revenue growth and investors and fund managers should be positive about the market prospects.

In this analysis, we only looked at North American buyouts and growth across only two sectors. For more information about fundamentals of other market segments, contact us or register at https://www.cepres.com/join-now

Entry & Exit Multiple Spread
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Asian Private Equity Returns & Value in a Global Context

Is Asian Private Equity a Safe Harbor in troubled Seas?

Asian private equity has very positive fundamentals that could help protect or hedge a portfolio in uncertain economic times. By analyzing over 5,500 Asian PE deals we found most deals are driven by revenue and margin growth versus the more common pricing and leverage factors in US and European buyouts. Read Dr. Daniel Schmidt’s presentation from SuperReturn Emerging Markets to learn more about the Asian market fundamentals and how it can apply in a portfolio context.

Enterprise Value Bridge for Asian Buyout
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Co-Investments

Christopher Godfrey, President CEPRES Corp., presented at SuperReturn Boston latest CEPRES PE.Analyzer activity: How emerging managers can compete with the constantly growing large GP platforms: Measuring PE.Analyzer 4 activity, large GPs tend to drown out capable emerging managers who also need powerful tools to help them compete on a level playing field.

Performance Attribution IRR
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Risk-Adjusted Returns & Value Creation

New Concepts Driving Better Strategy Selection

Find out the latest investment intelligence from CEPRES’ CEO Dr. Daniel Schmidt, who is proud to be invited as a guest speaker at the ILPA Annual Members Conference in Chicago at 6/7th of June 2018. Daniel talked about Optimal Investment Strategies and Portfolio Construction based on CEPRES’ understanding and his expectations of today’s Driver for Risk-Adjusted Returns & Value Creation.

The presentation gives insights on Risk as a Driver of return across market cycles

  • Value Creation of Buyout Investments: Revenue Growth, Margin Improvement and
  • Multiple Expansion
  • CEPRES analysis on historical developments of value drivers
  • CEPRES’ expectation of their future development and impact on returns
EV Bridge US vs Eurpean Buyout
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Emerging GPs Outperform, but Brands GPs a safe bet

Despite the dominance of mega funds and brand name GPs, new analysis by CEPRES shows that emerging managers (1st and 2nd generation funds) outperform overall. Conversely larger and brand name GPs making larger deals show lower risk with lower loss ratios and higher recovery rates on defaulting deals. There is a strong trend that larger GP groups are more active and raise highest proportion even when entering new territories in new strategies. Constant access and transparency to LPs, instead only temp. during fundraising periods, are proven key drivers.
  • What are their plans for deploying capital and generating the returns investors are looking for?
  • What makes a smaller fund attractive to LPs?
  •  Does it mean the end of small funds, or is there a silver lining for smaller and midsized managers?
Net fund IRR by generation
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US Buyouts dominate the market by 60%

How emerging managers can compete with the constantly growing large GP platforms: Measuring PE.Analyzer 4 activity, large GPs tend to drown out capable emerging managers who also need powerful tools to help them compete on a level playing field.
Nr co-invests by region
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Latest CEPRES Private Debt Report

Risk-Adjusted Returns are the new key measure to understand how Private Debt performs versus other asset classes like Buyouts, Stocks, Fixed Income, etc.

During the run-up to the Global Financial Crisis, median IRR returns declined significantly from almost 30% IRR in the early 2000s to nearly 10% IRR in 2007/2008. This trend aligns with the increasing Leverage Multiples and Loss Rates during that period.

The full Private Debt Market Report contains:

  • Performance Overview
  • Default Ratios Overview
  • Performance and Structure of Sponsored vs. Non-Sponsored Transactions
  • Special Analysis (Trends on the Private Debt Market)
Pricing by Deal Tranche Class Chart
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We are here to help!

  We are proud of what we achieved – let us show you! Or, if you have any questions, contact the CEPRES Service Team, call your regional CEPRES office or reach out to your account manager. We are glad to help.

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