Sat, Feb 22, 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. PE/VC: Venture debt: Is it a loan? Is it equity? Is it an pportunity?, PE, VC investments in India hit all-time high in 2019[more]

    Venture debt: Is it a loan? Is it equity? Is it an pportunity? From Forbes: Venture Capital is usually the default option for fast-growth startups looking for a cash injection, thanks to our willingness to take risks in return for equity, and with no need to pay anything back - at least

  2. Other Voices: Evolution of shrinking hedge fund fees - what do investors and managers need to know?[more]

    By Don Steinbrugge, Founder and CEO, Agecroft Partners (DonSteinbrugge@agecroftpartners.com): Hedge funds fees remain under extreme pressure across the industry. This strong trend is driven by declining return expectations from investors, inc

  3. COVID-19: Investors track ships, chase rumours to get edge on COVID-19 risks, Coronavirus risk puts the bull run on pause, China was wise to let markets stumble[more]

    Investors track ships, chase rumours to get edge on COVID-19 risks From Reuters: As investors crunch numbers to determine how the coronavirus will hit China's economy, hedge fund manager Nathaniel Polachek has tied much of his outlook to the fate of a ship anchored near Weihai, China.

  4. Bruce Berkowitz is back!, Coatue's new quant fund lost money in the fourth quarter[more]

    Bruce Berkowitz is back! From Institutional Investor: Famed value investor Bruce Berkowitz has hit hard times over the past decade, with big bets on losers like Eddie Lampert's Sears Holdings. In fact, over the past 10 years, his Fairholme Fund's annualized return is only 4.89 percent -

  5. Are all ESG Indexes as green as you want them to be?[more]

    From Beyond Investing: When Laurence Fink, chief executive of BlackRock, with nearly US$7 trillion under management, vows to put sustainability at the core of the firm's new investment approach, markets and investors sit up and liste