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State Street Private Equity Index returns 5.83 per cent in Q3

The State Street Private Equity Index posted a 5.83 per cent return for the quarter ended 30 September 2009, a slight increase from the second quarter of 2009 return and 1,418 basis points higher than the return recorded during the same period a year ago.

The since inception internal rate of return as of the third quarter of 2009 was 10.03 per cent, an increase of 95 basis points from the prior quarter.

“During the last few quarters we observed a stronger correlation between the public and private markets, which is reflected in the upward trend of the overall private equity returns,” says Bill Pryor, senior vice president of State Street Investment Analytics. “In addition we saw an increase in cash flow activity during the period, with higher distribution over paid in ratios relative to previous quarters.”

Since inception IRRs as of 30 September 2009 for the European and the rest of the world regions were 12.90 per cent and 2.59 per cent, respectively, with the latter showing an increase of more than 250 basis points from the quarter ended 30 June 2009.

Distressed debt and mezzanine funds, which posted a 13.44 per cent return for the third quarter of 2009, continue to perform better than other investment strategies.

Buyout funds recorded a quarterly return of 7.09 per cent, an increase of more than 200 and 1,602 basis points from last quarter and the third quarter of 2008, respectively.

Venture capital funds fell 6.55 per cent for the period, dropping by more than 650 basis points from the previous quarter and 241 basis points from the third quarter of 2008.

The index is based on the latest quarterly statistics from State Street Investment Analytics’ Private Edge Group and includes 1,650 private equity partnerships with a total fund size of USD1.5trn.

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