Returns, risks and liquidity of LBO Funds in Q4 2019
Throughout 2019, performance and risk have jointly stabilized at levels set in 2017, while selection risk has also stabilized at …
Average times-to-liquidity are a useful bench-marking instrument for fund investors. The time-to-liquidity of fully realized funds ranges from 4.1 years for mezzanine funds to 5.6 years for early-stage venture capital funds. These elements are interesting in anticipating the theoretical time-exposure of investors. However, they might aggregate significant variations from one vintage year to another.
Indeed, depending on the strategy, the minimum and maximum time-to-liquidity per vintage years can fluctuate a lot. Venture capital is probably the strategy which shows the largest divergences from the average. The minimum time-to-liquidity is exceptional as it results from the particularly favorable conditions for venture capital exits at the end of the decade 1990. Very long time-to-liquidity translates into lower multiples, and probably illustrate the challenging conditions that managers had to face before being able to sell portfolio companies.