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State Street’s GX Private Equity Index shows fund distributions outpacing capital draws in last 33 months

State Street Corporation has announced the results of the GX Private Equity Index (PEI), a benchmark for comparative analysis of private equity performance, which includes a comprehensive data set dating back nearly three decades.

In the first quarter of 2015, the index saw an overall return of two per cent. The index is based on directly sourced limited partnership data and represents more than USD2.2 trillion of private equity investments, with more than 2,400 unique private equity partnerships, as of 31 March, 2015.
 
“We have observed significant amounts of capital being returned to investors with fund distributions outpacing capital draws over the last 33 months, which is unprecedented in the past 25 years,” says Will Kinlaw (pictured), head of State Street Associates. “With so much capital coming back to them, limited partners face difficult decisions on where they put this money to work and whether to reinvest in private equity.”
 
First quarter highlights include:
 
• Venture capital was the best performing private equity strategy with a return of 3.87 per cent. Investors in these funds benefited from a 3.20 per cent increase in the valuation of venture-backed companies during the quarter, as well as realised gains and deal exits that generated more than USD1 billion in capital distributions.
 
• During the first quarter, Buyout and Private Debt strategies generated returns of 1.66 per cent and 1.34 per cent respectively.
 
• Due primarily to Euro depreciation during the first quarter of 2015, Europe-focused private equity funds dropped 2.88 per cent, which is the third consecutive quarter since the third quarter of 2014 that they posted negative quarterly returns.
 
“Venture capital performance has picked up significantly, with an annualised return of 17.13 per cent percent over the past three year period as compared to 12.62 per cent over a prior three year period. This uptick in performance is driven by rising valuations in venture-backed software and technology firms,” concluded Kinlaw. 
 

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