Venture capital funds are pitching strongly for European pension fund investment, as Schroders an-nounce a record $1bn worth of in-vestment in a European fund, with 48% of investors from Europe.
Adding to this optimistic picture the British Venture Capital Association (BVCA) announced performance measurement figures, calculated for the first time by the WM company, which showed venture capital funds outperforming all other investment classes.
Schroder Ventures European Fund, which has attracted several new continental investors, new to venture capital investments, is a new regional fund which succeeds the companies series of country specific management buy-out (MBO) funds. European invest-ors make up 48% of the total with 49% from the US, while 27% have not previously invested with Schroder funds.
Peter Smitham, chairman of Schro-der Ventures Europe, commenting on the balanced nature of the investors said: We believe that a strong domestic investor base will enhance our reputation as a European player."
British Venture capital funds outperformed both the FTSE index and all other asset classes with the net return after fees of 14.2% in 1996 from funds raised between 1980 and 1992. Forty per cent of assets where from MBO funds, in which Schroders has specialised. (See also Page 26).
For the first time funds were measured on a one, three, five and 10-year basis, to facilitate comparisons with other asset classes. Large MBO funds brought a return of 56.6% in 1996 followed by early stage venture capital funds which returned 40.2%.
Clive Sherling, chairman of the BVCA Investor Relations Committee said: " These figures indicate that pension funds with an exposure to UK venture capital funds will have en-hanced their overall returns. The BVCA believes this survey demonstrates that there is a role for venture capital in any portfolio."
The average rates of return were 42.9% for one year, 26.6% for three years, 25.7% for five years and 15.7% for ten years.