The total return on French private equity funds came in at 8.5 per cent for the end of 2011, exceeding Europe's overall performance of 5.6 per cent.
The latest figures from the Association Française des Investisseurs en Capital, the French private equity association (AFIC), and Ernst & Young also found that the private equity returns from French buyout houses outperformed both the European and US equity markets. The report notes that average returns for France still lag those of the UK.
For buyout funds, France performed particularly well with returns averaging 14.6 per cent, well above those recorded in Europe (11.4 per cent) and the US (9.7 per cent).
French growth capital investments posted average returns of 7.9 per cent, which according to the report was almost three times as much compared to Europe as a whole, which returned 2.8 per cent.
These results were calculated by taking into account two types of valuation. First, the estimated valuation of funds not yet returned to the market (residual value to paid-in), which represented 56 per cent of capital raised from investors at the end of 2011. And second, the effective performance of returned capital (distribution to paid-in), which totalled 75 per cent of raised capital at the end of 2011, compared with 67 per cent in 2010.
“Contrary to what might have been hoped for a year ago, the valuation of portfolio lines was stable in 2011 ( plus 0.2 per cent), leading to erosion in the net annual performance. This absence of a rerating, due in part to uncertainties about future performance, should, however, be set against the negative performance of financial markets in 2011, when the CAC 40 fell by 17 per cent. A comparison with equity market indices therefore reveals the strong resilience of the French private equity industry in a particularly volatile economic environment,” commented Hervé Jauffret and Philippe Blanadet, partners at Ernst & Young.
“The French buyout market, at 15 per cent, is particularly strong compared to other markets. And compared to other asset classes, and in particular compared to public equities, European private equity remains attractive,” added David Bernard, global head of content and product strategy for investment banking and private equity at Thomson Reuters.