Wed, May 27, 2020
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Private Equity Strategies

Data Snapshot: Global Private Equity

Monday, December 11, 2017

by Roger Beutler, CAIA

Independent Private Equity Analyst

The Cambridge Associates U.S. Private Equity Index posted preliminary results of 3.51% for the second quarter and 7.53% YTD, with the S&P 500 Index posting 3.09% and 9.34%, respectively for the same period. Globally, the CA Global Buyout and Growth ex. U.S. Index returned 7.75% in the second quarter and 12.05% YTD, compared to the MSCI World All Country Index at 5.78% and 14.10%.

More meaningful long-term performance, especially when considering cash flows as measured by public market equivalent returns, remain favorable for private equity, rewarding long-term investors with a liquidity premium over public market returns. Nevertheless, the investing environment for private equity investors has become more challenging recently.

While record setting public markets provide a favorable exit environment, higher valuations also potentially increase entry valuations for new investments. Total leverage for buyout deals has been creeping back up while equity participation decreased amid still cheap financing despite private equity funds swimming in an abundance of dry powder.

While sponsor to sponsor deals aka secondary buyouts have increased, M&A activity decreased significantly as corporations are wary of making high priced acquisitions late in the growth cycle. IPOs have been fairly stable but are only a small contributor to buyout exits. With close to 40% of buyout deals due to exit, private equity firms are starting to feel the pressure from investors to realize paper gains and refocus their resources on new deals, especially in light of the massive dry powder.

Fundraising, despite plenty of dry powder, continues to be brisk. With Apollo closing its 9th fund at a record setting $24.7B, many investors continue to bet on marquee names and large funds as a safe haven and means to deploy money in order to reach asset allocation targets. U.S. Venture Capital, as measured by the Cambridge Associates U.S. VC Index, returned 0.96% in the second quarter and 4.75% YTD based on preliminary results. While the results of pooled public market equivalent returns over the long term remains mixed at best, investors should keep in mind that PE / VC was never an asset class where one adds value with average managers.

 
This article was published in Opalesque's Private Equity Strategies our monthly research update on the global private equity landscape including all sectors and market caps.
Private Equity Strategies
Private Equity Strategies
Private Equity Strategies


Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Tiger Global tops the list US-based venture capital market[more]

    Laxman Pai, Opalesque Asia: Tiger Global Management holds on to its position as market-leader in US-based venture capital, said a study. According to Preqin, the closure of tech-focused Tiger Global Private Investment Partners XII in January means the New York-based firm has raised more than

  2. Tech: Fintech startup Brex closes $150m in pure venture funding amid recession[more]

    From Business Insider: Brex, the 3-year-old fintech unicorn, raised an additional $150 million in equity funding from existing investors and Lone Pine Capital, the company announced Tuesday. The cash infusion raised the startup's valuation to "around the $3 billion mark," cofounder and co-CEO Henriq

  3. PE/VC: Venture debt set to take prominent role, Building out Goldman Sachs's private-equity business[more]

    Venture debt set to take prominent role From PE News: Venture debt financing could be having its moment as the equity market becomes less friendly to start-ups. About $10bn worth of venture debt deals were made this year as of 21 April, a pace set to eclipse the roughly $25bn in such de

  4. Study: Emerging market bond issuers take hit as global recession deepens, The coronavirus pandemic could cost the global economy a nightmarish $82tn over 5 years, a Cambridge study warns[more]

    Emerging market bond issuers take hit as global recession deepens Increasing credit stress evident amongst many high-yield EM non-financial corporates as coronavirus disruption takes its toll, says Moody's. 74 out of 106 rated EM sovereigns have a stable outlook as of 30 April 2020 (compa

  5. Investing: Singer bets on Europe, emerging markets, Britain's unhealthy appetite for financial risk in essential services, How Stan Druckenmiller shook up his portfolio[more]

    Singer bets on Europe, emerging markets From Investment Magazine: William Blair's Brian Singer is looking to invest in Europe and the emerging markets as the recovery from the global economic shutdown to contain the pandemic will likely take longer than what the market has priced in.