Private equity (PE) managers in the US posted their strongest annual returns since 2013 in 2016, while US venture capital (VC) funds performed worse last year than they have since 2008, according to the benchmark indexes of the two alternative asset classes from Cambridge Associates.
The Cambridge Associates LLC US Private Equity Index returned 4.5 per cent for the fourth quarter of 2016 and 12.9 per cent for the full year. The Cambridge Associates LLC US Venture Capital Index meanwhile, posted a return of -0.1 per cent during Q4 2016 and 0.3 per cent for the full year.
“Private equity funds in the US generated double-digit returns for the year. In a departure from the last two years, energy companies were a positive contributor to returns in the private equity index instead of a drag,” says Keirsten Lawton, Managing Director and co-head of US Private Equity Research at Cambridge Associates.
“While public markets’ returns compounded, the venture capital industry had another year of disappointing exit activity, with few IPOs. Distributions outpaced contributions in 2016 but they declined from 2015 levels and mainly rewarded older vintage year fund performance, while younger private companies faced, overall, a more discerning funding environment,” says Theresa Hajer (pictured), Managing Director and co-head of US Venture Capital Research at Cambridge Associates.
Cambridge Associates derives its US Private Equity and Venture Capital Indexes from the financial information contained in its proprietary database of 1,370 US private equity funds and 1,708 US venture capital funds, with a combined values of roughly USD841.9 billion.
