Private Equity Industry Maintains Upward Trajectory
As PE Index reaches new high since recession, uncalled capital remains a concern
Washington, DC, May 10, 2011 –The Private Equity Growth Capital Council’s (PEGCC) Private Equity Index (PE Index) has reached its highest level since the depth of the recession, according to the latest data industry released today.
At the end of the first quarter of 2011, the PE Index settled at 119.2, well above its 10-year moving average of 100, though still below the record high of 154.9 recorded during the fourth quarter of 2006. Other key metrics captured by the first quarter PEGCC PE Index include:
- Fundraising by buyout funds totaled $24.0 billion, representing an increase of nearly 300% from its lowest level since the recession, recorded in 2009-Q4.
- 18 private equity-backed initial public offerings (IPOs) raised a total of $12.1 billion globally. This is a marked increase compared to the $4.3 billion raised from 12 IPOs in the same period during the previous year.
- Private equity-backed mergers and acquisitions (M&A) took a slight dip, as smaller-sized buyout deals (<$500m) dominated M&A activity.
- Equity contributions in buyout deals dipped to an average of 35.4% of enterprise value, thus edging back closer to historical norms.
“Private equity activity continued to recover in the first quarter,” said Douglas Lowenstein, the PEGCC’s President and CEO. “It is also worth noting that levels of uncalled committed capital (dry powder), continued to decline, hitting $414.0 billion globally, though they remained well above pre-recession levels. We can expect further growth in the index as dry powder is deployed,” said Lowenstein.
Designed to provide an accurate snapshot of the state of the private equity market at any given point in time, the PE Index is a composite measure of global private equity activity based on four key factors: total direct investment (including equity contributions to acquisitions and minority stakes, public equity investments, and other corporate financing); buyout transaction volume; fundraising; and the dollar value of private equity exits (portfolio company IPOs or sales to corporations or other investors). The Index measures 100 when all four components are at their ten-year moving average. These four factors were chosen to make up the index because collectively they capture the most fundamental elements of the private equity market.
The Private Equity Index is calculated using data provided by Thomson Reuters, Pitchbook, Preqin and the Council’s members. The Council plans to update the PE Index at the end of each quarter.
View the 2011 Q1 Industry Update for Release
