Fund strategy benchmarking | Competitive value & volume analysis | Portfolio evaluation

Business need

  • The client, a UK-based buyout firm, was looking to raise a new fund, and as part of the preliminary due diligence, wanted to assess historic funds raised by selected private equity (PE) firms.
  • It wanted to analyse other mid-market PE funds across asset classes and investment strategies and benchmark their performance over time.

To track the evolution of funds and their performance based on geographic focus, sector focus and investment strategy.

The client outlined two key reasons for engaging RocSearch:

  • Our ability to rapidly deploy customised teams of investment research specialists.
  • Our flexible client-centric engagement models.

Approach and Methodology

  • Our investment advisory team carefully examined the historical evolution of select PE funds as well as the portfolio companies of the mid-market PE landscape over the last two decades.

For these 50 mid-market funds, RocSearch performed a value and volume analysis of their investment strategies and examined the shift in focus by geographies, types of funds and sectors.

Digital India
  • We studied the evolution of median hold period of the portfolio companies, their split by sectors and time period, and benchmarked the fund performance of PE firms based on their asset class diversification. The analysis included both geography-focussed and geography-agnostic funds.
  • Using Mekko Charts, we analysed the values of funds raised across different fund size brackets, for both single-asset class and diversified PE firms investing regionally or internationally.
  • We benchmarked the number of investments and exits over the last 10 years, based on the fund size brackets. Finally, we shared brief profiles of these funds capturing their investment and portfolio strategies.

Business Outcomes

  • To help the fund differentiate, the client included sectors such as B2C services, automation and logistics as the fund’s investment focus and expanded the geographic focus to include Middle East and Latin America.
  • The exercise allowed its investor relations team to gain a detailed understanding of the prevailing competitive landscape of PE funds and the wide variety of geographic, sectoral and asset class strategies being pursued by them.
  • The output allowed the firm to develop a robust investment strategy for its new USD 5bn fund, with all the prevailing favoured strategic themes.

In less than six months, the client was able to come up with a robust strategy for raising its new USD 5bn fund with the prevailing favoured strategic themes.

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