The State Street Private Equity Index posted a 6.57% return for the quarter ended 30 September 2010, 592 basis points higher than the previous quarter and 74 basis points higher than the year ago period.
The third quarter return for the European and Rest of World regions were 14.66% and 5.59%, respectively, with both reflecting a significant increase from prior quarter.
For the one-year period beginning in the fourth quarter of 2009 and ending in the third quarter of 2010, all Private Equity recorded a 19.5% one-year end-to-end return; Mezzanine and Distressed Debt funds combined recorded a 20.9% return for the same one-year investment time period, down from 27.9% last quarter. Buyout funds posted 20.8% return for the same time period.
“Private Equity continued to recover in the third quarter of 2010 since reaching its lowest point in the fourth quarter of 2008,” says Suresh Krishnamurthy, senior vice president at State Street. “Despite continued challenges with fund raising and the availability of credit and exit channels, firms tracked in our Private Equity Index distributed $88.3 billion in proceeds in the last four quarters, a 240% increase over the year-ago period. As a result, distribution multiples have recovered nicely from historical lows and are now more in line with historical averages in this asset class. Increased distributions and six consecutive quarters of positive returns demonstrate strong momentum in the sector.”
All three major private equity strategies posted higher since inception return as of September 30, 2010. Buyout funds and Venture Capital recorded 12.4% and 9.2%, respectively. Distressed Debt and Mezzanine funds posted an 11.7% since inception return.
