Oxstones Investment Club™State Street Corporation’s GX Private Equity Index (PEI) saw an overall gain of 2.7 per cent in Q2 2016, with buyout, private debt and venture capital all posting positive returns.
“The last eight quarters have been difficult for all private equity funds. Rolling one-year returns have been in decline since the second quarter of 2014, down from a nearly 30 per cent return to single digits, mainly due to continued slow growth, economic and political uncertainty, and a lacklustre IPO market,” says Will Kinlaw, senior managing director and global head of State Street Associates, a division of State Street Global Exchange. “Nonetheless, we do see recent gains in buyout funds, which can in large part be tied to the strong performance we’ve been seeing in energy-focused funds.”
The PEI is based on directly sourced limited partnership data and represents more than USD2.4 trillion in private equity investments, with more than 2,600 unique private equity partnerships, as of 30 June 2016.
Improving quarter over quarter for the last four quarters, buyout gained 3.41 per cent in Q2 (up from 1.25 per cent in Q1) while private debt funds gained 2.61 per cent (up from 0.75 in Q1) during the second quarter of 2016. Venture capital posted a 0.28 per cent return in Q2 (up from -1.49 per cent in Q1).
Among all three main strategies, venture capital posted a 0.84 per cent return for one year, as of Q2 2016; while buyout and private debt recorded 4.98 per cent and 1.77 per cent returns respectively, for the same period.
Recent volatility of the Euro foreign exchange rate has brought some headwinds to European focused funds. The quarterly return dropped from 3.51 per cent in Q1 to 0.67 per cent in Q2 2016. One year returns also declined from 14.95 per cent at the end of March 2016 to 7.27 per cent as of June 30, 2016.
“In the second quarter we saw movement to European-based funds among a significant amount of investors looking to capitalise on the Brexit, as the declining Euro and British Pound created opportunities for investors looking to make new commitments to the region,” says Anthony Catino, managing director, alternative investment solutions for State Street. “It will be interesting to see how these Euro funds perform throughout the remainder of 2016.”
http://www.privateequitywire.co.uk/2016/11/23/246043/gx-private-equity-index-ends-q2-gains-despite-weakening-economic-growth
Tags: Brexit, buyout, economic uncertainty, Euro funds, political uncertainty, private debt, private equity, private equity funds, private equity investments, Venture Capital