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State Street private equity index “highlights constrained deal flow”

State Street Corporation says the tightening of credit conditions in the US has constrained deal flow, as it announces third quarter results of the State Street Private Equity Index.

State Street Corporation says the tightening of credit conditions in the US has constrained deal flow, as it announces third quarter results of the State Street Private Equity Index.

The index is based on the latest quarterly statistics from State Street Investment Analytics’ private edge group, which provides detailed analyses of customers’ private equity portfolios.

‘The tightening of credit conditions, especially in the US, has constrained deal flow during the quarter as evidenced by cancellation and postponement of several buyout transactions and increased challenges in placing leveraged buyout debt for completed transactions,’ says William Pryor, senior vice president.

‘This decrease in buyout transactions has manifested itself in slightly lower overall valuations and thereby lower long-term returns on a quarter-over-quarter basis across the US private equity space. However, international private equity actually displayed slightly improved returns over the prior quarter due to the continued weakness of the US dollar.’

The long-term internal rates of return of the index by major private equity strategy show that buyout fell from 15.79 per cent in the previous quarter to 15.70 per cent. Venture capital fell from 13.23 per cent to 12.42 per cent.

In total, the long-term internal rate of return fell from 15.29 per cent to 15.03 per cent. The non-US total (which is included in the overall total) increased from 20.80 per cent to 21.68 per cent.

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