What Was the Performance of the PPIP Program?

My previous post about unreturned TARP funds got me to wondering about PPIP and how the asset managers who participated in the program ended up doing.

For those who may not remember, during the financial crisis there were supposed to be all sorts of toxic "legacy securities" sitting on bank balance sheets.  The government spent a lot of time trying to figure out a way to remove these securities from bank balance sheets without 1) overpaying 2) causing the banks to incur a loss so great that it would impair their capital.  One solution was the PPIP (Public Private Investment Partnership) which effectively turned the US Treasury into a prime broker for 8 very lucky hedge funds.  The idea was to take 50% private money, 50% public money (as equity) and then double that with more public money (termed as debt (even though it's all debt anyways)) and use that to buy the riskiest securities that could be purchased off of bank balance sheets.

In all, $7.3B of private money was combined with $22B of public money to form PPIP funds.  The funds were structured to shutdown in 2012, and many of them will end their investment period this month.  As the financial crisis fades deeper and deeper into memory, the PPIP funds have been mostly forgotten as well, but the Treasury still does report on how they've done on a quarterly basis.  Below is the performance of the funds, which have on average earned an 88% cumulative return since 4Q09.  For its part, the treasury earned a return of 1.48x its equity (after fees).  Over the same general period, the S&P 500 is up about 40%. More information on the PPIP program can be found: here.

PPIP Fund Performance