Private Equity Performance Strong in Q1 2006

NEW YORK, July 31 /PRNewswire-FirstCall/ -- Private equity returns improved in the short term and showed continued stability in the long term for the period ending March 31st 2006, according to Thomson Financial and the National Venture Capital Association (NVCA). At the end of the first quarter, the one, three and five year returns improved for both venture capital and buyout funds compared to Q4 2005 and the same period one year ago. Long term performance remained steady and continued to outperform both the S&P 500 and NASDAQ for the ten and twenty year horizons.

Short term performance showed an increase with the one year venture capital returns posting a 19.8% return for Q1 2006 up from 13.3% in Q4 2005. Five year returns improved, but remained in negative territory at -4.4% up from -6.7% in Q4 2005. This negative return continues to reflect the aftermath of the tech bubble burst. Ten and twenty year returns remained steady at 22.7% and 16.5% respectively.

One year buyout returns saw a very slight increase posting 25.5% for Q1 2006 compared to 25.3% for Q4 2005. Ten and twenty year buyout returns were relatively steady at 8.9% and 13.3% respectively.

"Despite the lackluster IPO market in the first quarter of this year, the venture capital industry enjoyed a healthy performance, most likely on the strength of the acquisitions market," said Mark Heesen, president of the National Venture Capital Association. "The performance news is positive -- we hope it is sustainable. If we want to continue to outperform the public markets long term, we are going to have to see more venture-backed companies entering the public markets."

The venture-backed IPO market continued to struggle in Q1 2006 with only 10 companies going public on US exchanges and a significant drop in the post offer valuations as well. In contrast, the venture-backed M&A market for Q1 2006 performed well with deal volume and deal value experiencing sharp increase over Q4 2005.

"The stability of the long term returns for both venture capital and buyouts makes these asset classes very attractive for investors looking for a higher return then traditional markets. We expect this news will continue to support a vibrant fundraising market for both venture capital and buyout funds. Having said that, this record availability of new capital will put increasing pressure on firms to remain disciplined to not raise more than can generate attractive returns," said Joshua Radler, assistant project manager of Thomson Financial.

  Thomson Financials' US Private Equity Performance Index (PEPI)
  Investment Horizon Performance through 03/31/2006

  Fund Type                              1 Yr   3 Yr   5 Yr   10 Yr  20 Yr
  Early/Seed VC                           9.7    5.0   -8.6   41.4   20.5
  Balanced VC                            31.0   13.5   -1.0   18.0   14.6
  Later Stage VC                         17.4   10.7   -1.8   10.7   13.8
  All Venture                            19.8    9.4   -4.4   22.7   16.5
  Small Buyouts                          40.0    9.0    3.2    7.6   25.8
  Med Buyouts                            17.4   11.1    3.5   10.5   16.5
  Large Buyouts                          31.2   17.2    5.7    9.0   12.6
  Mega Buyouts                           24.9   19.1    7.1    8.7   11.4
  All Buyouts                            25.5   17.6    6.3    8.9   13.3
  Mezzanine                              11.9    6.1    3.1    6.6    9.1
  All Priv Equity                        22.8   14.7    3.0   11.8   14.3
  NASDAQ                                 17.0   20.4    4.9    7.8   10.1
  S&P 500                                 9.7   15.1    2.2    7.2   12.1

  Source: Thomson Financial/National Venture Capital Association

*The Private Equity Performance Index is based on the latest quarterly statistics from Thomson Financials' Private Equity Performance Database analyzing the cashflows and returns for over 1814 US venture capital and private equity partnerships with a capitalization of $657 billion. Sources are financial documents and schedules from Limited Partners investors and General Partners. All returns are calculated by Thomson Financial from the underlying financial cashflows. Returns are net to investors after management fees and carried interest. Buyout funds sizes are defined as the following: Small: 0-250 $Mil, Medium: 250-500 $Mil, Large: 500-1000 $Mil, Mega: 1 Bil +

About Thomson Financial

Thomson Financial, with 2005 revenues of US$1.9 billion, is a provider of information and technology solutions to the worldwide financial community. Through the widest range of products and services in the industry, Thomson Financial helps clients in more than 70 countries make better decisions, be more productive and achieve superior results. Thomson Financial is part of The Thomson Corporation (http://www.thomson.com/), a global leader in providing integrated information solutions to more than 20 million business and professional customers in the fields of law, tax, accounting, financial services, higher education, reference information, corporate e-learning and assessment, scientific research and healthcare. With revenues of US$8.40 billion, The Thomson Corporation lists its common shares on the New York and Toronto stock exchanges (NYSE: TOC; TSX: TOC).

The National Venture Capital Association (NVCA) represents approximately 480 venture capital and private equity firms. NVCA's mission is to foster greater understanding of the importance of venture capital to the U.S. economy, and support entrepreneurial activity and innovation. According to a 2004 Global Insight study, venture-backed companies accounted for 10.1 million jobs and $1.8 trillion in revenue in the United States in 2003. The NVCA represents the public policy interests of the venture capital community, strives to maintain high professional standards, provides reliable industry data, sponsors professional development, and facilitates interaction among its members. For more information about the NVCA, please visit http://www.nvca.org/ .