Following Record 2015 Activity, State Street’s GX Private Equity Index Continues to Show Noticeable Pullback in Venture Capital Deals in 2016

Despite Slowdown in Activity, Private Equity Returns Continue to Rise

Tuesday, February 21, 2017 10:32 am EST

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"Following record years of exit activity in 2014 and 2015, private equity firms are cautiously putting money to work"

BOSTON--(BUSINESS WIRE)--State Street Corporation (NYSE:STT) today announced the results of its GX Private Equity Index (PEI), a benchmark for comparative analysis of private equity performance, which includes a comprehensive data set, in some cases dating back to 1980. In the third quarter of 2016, the index saw an overall return of 3.8 percent, with Buyout, Private Debt and Venture Capital each posting positive returns.

“Following record years of exit activity in 2014 and 2015, private equity firms are cautiously putting money to work,” said Will Kinlaw, senior managing director and global head of State Street Associates, a division of State Street Global Exchange. “Despite the second half of 2016 representing some of the lowest levels of private equity deal activity, we continue to be encouraged by positive and meaningful gains in returns in all three private equity categories.”

The PEI is based on directly sourced limited partnership data and represents more than $2.5 trillion in private equity investments, with more than 2,600 unique private equity partnerships, as of September 30, 2016.

Third Quarter Highlights Include:

  • Despite the slowdown in activity, Venture Capital recovered from its previous two quarters of lackluster returns, posting a quarterly gain of 3.72% in Q3 (up from 0.28% in Q2). Buyout and Private Debt funds gained 3.86% (up from 3.41% in Q2) and 3.59% (up from 2.61% in Q2) in Q3, respectively.
  • Among all three main strategies, Buyout recorded the highest one-year return of 10.38% as of Q3 2016, while Venture Capital and Private Debt recorded returns of 4.72% and 6.13%,respectively, for the same period.
  • While Q3 2016 was another quiet quarter for the global IPO markets, towards the end of 2016, we observed a bounce-back in private equity deal activities with both monthly capital drawdown and distribution ratio picking up significantly.
  • European-focused private equity funds recorded a strong quarter, 4.08% in USD-denominated returns, up from 0.67% in the previous quarter. One-year returns also increased, at 10.82% at the end of September 2016, up from 7.27% in the previous quarter.

“Volatility in the market as a result of 2016 geopolitical events is causing investors to hold off on making bold investment decisions,” said Anthony Catino, managing director, Alternative Investment Solutions for State Street. “Once instability subsides, we anticipate an increase in investor activity.”

For additional insights, or to learn more about the GX Private Equity Index please visit http://www.ssgx.com/peindex.

About State Street Corporation
State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors, including investment servicing, investment management and investment research and trading. With $29 trillion in assets under custody and administration and $2 trillion* in assets under management as of December 31, 2016, State Street operates in more than 100 geographic markets worldwide, including the US, Canada, Europe, the Middle East and Asia. For more information, visit State Street’s website at www.statestreet.com.

*Assets under management for State Street Global Advisors (SSGA) were $2.47 trillion as of December 31, 2016. Assets under management reflects approximately $30.62 billion (as of December 31, 2016) with respect to which State Street Global Markets, LLC (SSGM) serves as marketing agent; SSGM and SSGA are affiliated.
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Investing involves risk including the risk of loss of principal.

Past performance is no guarantee of future results.

Performance of an index is not illustrative of any particular investment. It is not possible to invest directly in an index.

This press release is provided for informational purposes only and should not be considered investment advice. Any such views are subject to change at any time based upon market or other conditions and State Street disclaims any responsibility to update such views. Neither State Street nor its affiliates can be held responsible for any direct or incidental loss incurred by applying any of the information offered. Please consult your tax or financial advisor for additional information concerning your specific situation.

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