State Street Corporation, the provider of financial services to institutional investors, announced the results of the State Street Private Equity IndexSM as of September 30, 2009. The index is based on the latest quarterly statistics from State Street Investment Analytics Private Edge Group and includes 1,650 private equity partnerships with a total fund size of $1.5 trillion.
The Private Edge Group provides detailed analyses of private equity investments for a diverse client base including asset managers, public and private pensions, endowments and foundations, representing nearly 5,000 commitments totaling $250 billion. The Private Edge Group has one of the most extensive and comprehensive private equity data sets currently maintained in the marketplace, including partnership information down to the portfolio company level.
For the quarter ended September 30, 2009, the index posted a 5.83% return, a slight increase from the second quarter of 2009 return and 1,418 basis points higher than the return recorded during the same period a year ago. The since inception Internal Rate of Return (IRR) as of the third quarter of 2009 was 10.03%, an increase of 95 basis points from the prior quarter.
During the last few quarters we observed a stronger correlation between the public and private markets, which is reflected in the upward trend of the overall private equity returns, says Bill Pryor, senior vice president of State Street Investment Analytics. In addition we saw an increase in cash flow activity during the period, with higher distribution over paid in ratios relative to previous quarters.
Since inception IRRs as of September 30, 2009 for the European and the Rest of the World regions were 12.90% and 2.59%, respectively, with the latter showing an increase of more than 250 basis points from the quarter ended June 30, 2009.
Distressed Debt and Mezzanine funds, which posted a 13.44% return for the third quarter of 2009, continue to perform better than other investment strategies. Buyout funds recorded a quarterly return of 7.09%, an increase of more than 200 and 1,602 basis points from last quarter and the third quarter of 2008, respectively. Venture Capital funds returned -6.55% for the period, dropping by more than 650 basis points from the previous quarter and 241 basis points from the third quarter of 2008.
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D.C.