Some high-profile venture capital and private equity firms are slashing the valuation of their holdings, causing billions in apparent profits to evaporate as the economic downturn undermines the sustained growth of the last 13 years.
The California Pension System, the largest pension system in the U.S. whose investments are sprinkled across the globe, injected $368.8 million into Silver Lake Partners’ 2015 V fund. In the quarter ending September 2021, the value on that return stood at $668.3 million. However, by the same quarter in 2022, this figure was reduced by $100 million, according to documents released by the pension firm in response to a request for public records made by TechCrunch.
Similarly, TCV’s X fund, established in 2019, noted a decrease in value on its holdings in CalPERS to $245 million in September 2022, from $333 million the previous year, in spite of additional capital inflows.
Insight Partners’ 2015 Growth-Buyout Coinvestment Fund experienced a drop in its net internal rate of return (IRR) to 33.8% for the quarter ending in September last year, down from 39.4% the previous year. Its flagship IX fund also reduced its value multiple from 4.4 to 3.7 during the same period.
Sequoia Capital disclosed the value of UTIMCO’s $100 million investment into a 2021 fund as $81.3 million as of February this year, as per records from the University of Texas, another high-profile endowment, obtained via request for public records.
Insight Partners’ 2021 twelfth fund reported a reduced value of UTIMCO’s $104 million investment at $85.8 million in the same month. Thoma Bravo’s fourteenth fund from 2020 listed a value of $108.8 million on a $124.2 million investment from UTIMCO, and Thrive Capital’s eighth growth fund reported a value of $5.5 million on a $7.6 million investment.
The trend is widespread, with nearly all funds reporting a decrease in the value of their holdings over the past year. Though it’s a little surprising that it has not plunged more, it’s likely in the quarters since stakes have plunged further in value.
Tiger Global’s XV fund reported a $230.5 million value on a $247 million investment from CalPERS as of September last year. Advent’s ninth fund, initiated in 2019, saw its anticipated return multiple sliced in half to 1.5 at the end of September last year from the year prior, per CalPERS filings.
Older funds, established over a decade ago, are also feeling the pinch from the economic downturn. SAIF Partners’s China III fund, inaugurated in 2007, valued its returns on CalPERS’ $127 million investment at $300 million in September 2021. This value fell to $230 million one year later. Khosla Ventures’ 2009 third fund, also experienced a considerable markdown in returns from $447 million to $380 million.
In spite of the challenging market dynamics, a selection of funds have nonetheless either expanded or sustained notable performance. UTIMCO has backed seven separate funds of Union Square Ventures, established between 2004 and 2016. According to data available as of February this year, these investments have yielded IRR ranging from 21.6% to an impressive 66.42%.
Meanwhile, Valor Equity Partners’ fourth fund, initiated in 2017, has maintained a stable performance over time. CalPERS invested $71.6 million in the fund, which was reported to be worth $172.6 million as of September the previous year, demonstrating a virtually unchanged value from the prior annual assessment.
You can read the full documents below. Figures from UTIMCO were first reported by journalist Eric Newcomer.