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"returns to that asset class, they've been pretty bad." Renewable energy assets have a pretty good IRR, in the mid-teens to low 20% - and even higher if you lo
by antr 14y ago
"returns to that asset class, they've been pretty bad."
Renewable energy assets have a pretty good IRR, in the mid-teens to low 20% - and even higher if you look at the 1995-2004 vintage.
To any LP that is an above average return, in fact, it is above any equity return threshold for asset manager incentives/carry.
Where did you get the data for you to say that "they've been pretty bad"?
- lifeisstillgood 14y agoI always return to this bet with John Kay: http://books.google.co.uk/books?id=6BLqprHdwygC&lpg=PA151&ots=E7_TYv35xm&dq=undercover%20economist%20returns%20investment%20railways%20USA&pg=PA151#v=onepage&q=undercover%20economist%20returns%20investment%20railways%20USA&f=false http://books.google.co.uk/books?id=6BLqprHdwygC&lpg=PA15... returns for the most successful railroad companies were mere 5% - competition kept things down (although speculation in early years lead to phenomenal returns - if sold) However, a moderate VC return is 3fold over ten years - which is ~12.5% YoY (unless my maths is bad). But then that is 12.5% of millions and millions not just one company.
- antr 14y agoI struggle to understand your point - I'd love to here a bit more to understand it. The IRR numbers I mention refer to UFCF/equity, i.e. no exit (hence return) via company/asset sale.
- lifeisstillgood 14y agoThat the return (assuming no sale at top of a bubble) for the best companies in the biggest industry of 19C was only 5%-10%. (Based on equity, it seems Harford did not calculate dividend return which may make a difference) Making 15-20% without an exit is a great deal - supporting I think your point.
- antr 14y agoIndeed, I agree. I'd be curious to know how common was the use of debt during that period. 5%-10% is a good return on an unlevered asset, debt could provide an additional turn - then, I don't know how the Kd and CPI was during that period.
- lifeisstillgood 14y agoDuring the 19th Century, U.S. railroads relied primarily on debt issues to finance their growth. This policy contributed to major financial crises (www.biu.ac.il/soc/ec/wp/16-01/16-01.pdf) Is that what you mean - or derivatives?
- antr 14y agojust wanted to know - now it's clear