Spanish Private Equity and Venture Capital funds demonstrate remarkable resilience and adaptability amid a globally uncertain economic environment. This is one of the key takeaways from the 2023 Study on the Profitability of Private Capital in Spain, jointly prepared by EY's Strategy and Transactions team and SpainCap, with support from Webcapitalriesgo.
In 2023, the net Internal Rate of Return (IRR) for private capital funds stood at 11.2%, maintaining levels consistent with the previous year (11.3% in 2022). The Total Value to Paid-In Capital (TVPI) multiple rose from 1.5x to 1.6x, solidifying value creation for investors. Between 2022 and 2023, private equity funds saw a 0.5% improvement, contrasting with a decline in venture capital fund returns, which dropped to 10%, barely holding onto double digits. This trend can be attributed to factors such as reduced liquidity in early-stage investment markets, the impact of interest rates on the valuation of companies with distant cash flows, and a base effect as the industry matures.
When analyzing fund types, those classified under Articles 8 and 9 of the Sustainable Finance Disclosure Regulation (SFDR), which focus on ESG criteria, continue to widen their performance differential, achieving a 14.6% return. This represents a three-percentage-point lead over the sector average and a 0.3% increase compared to their results from the previous year.
Compared to other asset classes, Spanish private capital continues to outperform: delivering returns more than double those of the IBEX 35 and 50% higher than the Euro Stoxx 600. Returns also significantly surpass those of 10-year Spanish government bonds, with an over 8% differential, and nearly double those of real estate investments.
Between 2006 and 2023, the value of private capital assets under management increased by 1.8 times, reaching nearly €14.7 billion in 2023. This trend reflects sustained interest and investor confidence in the Spanish private capital market, highlighting its ability to attract and manage investments efficiently over time.
This edition of the study features an expanded sample, incorporating data from 52 asset management firms and 158 Spanish private capital funds, representing approximately 47% of the population and 64% of total capital contributions during the 2006-2021 period (€10.67 billion in total).
Juan López del Alcázar, Managing Partner of EY’s Strategy and Transactions area, commented on the report: “This edition, which includes 2023 data, continues the series started in 2006 and provides a deeper and more precise view of the sector. This year, we managed to further increase participation, with 52 firms contributing to the study—an 11% increase compared to the previous year. This growing participation reflects the increasing trust of asset management firms in this transparency initiative, which was challenging to establish but has now become a benchmark in the sector.”
Elena Rico, President of SpainCap, emphasized: “As a sector committed to sustainable investment, our goal is not only to deliver returns to investors but also to create jobs and wealth for the economy. The positive returns we have demonstrated over the years, as shown in this report, consistently generate double-digit net returns in Venture Capital and Private Equity. With the continued transparency efforts of our industry—which currently generates over half a million jobs within management firms and their portfolio companies—we are confident that we will continue to create value and innovation for Spain’s industrial fabric, fostering more global businesses capable of competing in other markets.”
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About SpainCap
SpainCap represents the Venture Capital & Private Equity industry in Spain. Chaired by Elena Rico, it brings together over 180 national and international Venture Capital & Private Equity firms, 100 service providers, and 27 institutional investors. SpainCap connects all industry players in Spain, advocating for their interests with the government, media, and public opinion, both nationally and internationally, through partnerships and synergies in Europe and Latin America.
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