Private equity returns were at their highest level in the first quarter of 2017, up 3.95%, according to the State Street Global Exchange Private Equity Index (GXPEI).
The strong performance was based on returns from buyout funds and private debt, with a big rise in venture capital. Buyout funds were up 4.23% in the first quarter, meaning they have outperformed the other two main strategies for five consecutive quarters. Venture capital funds made a 3.5% gain, driven by the information technology sector, which is seeing valuations past the dotcom peak, according to Will Kinlaw, senior managing director at State Street Associates. Private debt funds saw a 3.1% gain in the first quarter.
Regionally, Europe-focused private equity funds did well, with a 4.09% increase in US dollar denominated terms, ahead of US-focused funds at 3.93% and the rest of the world with 3.89%. Anthony Catino, managing director, Alternative Investment Solutions for State Street, commented: “Over the past few years, the dry powder has been steadily increasing as a result of strong inflows from the limited partners and cautious capital calls by the general partners. As of Q1 2017, we saw some early signs of a trend reversal in total dry powder, which dropped from a peak of $488 billion in May 2016 to $461 billion in March 2017.”