Monday, June 23, 2014

Private Equity Navigator: Private Equity Analysis from Pevara & INSEAD’s Global Private Equity Initiative

PRAHL Michael, PODDAR Sridarth, ZEISBERGER Claudia
Read the report
quarterly publication in conjunction with PEVARA, a unique data set based on deal data from institutional investors.

In the first quarter of 2014, both the sum of capital calls and distributions by PE funds declined over the preceding quarter, broadly reverting to the investment and exit rate of the first nine months of last year. This continued the long-term trend of high quarterly realisations and low capital calls (page 2). Private equity returns improved in 2013 compared to the two preceding years; the returns recorded in Q4 2013 being the best in three years (page 3). This reflects a sustained recovery in the industry since the global financial crisis. We made significant new commitments to private equity funds for both our portfolios as they distributed capital over the last quarter. This was done to maintain a $1bn gross allocation to private equity across each portfolio (pages 4 & 5). While the net cash flow for one of our two portfolios had started increasing in the previous quarter, capital calls and a slower pace of distributions meant that this trend did not continue in Q1 2014, and net cash positions for both portfolios (capital outstanding) increased over the quarter (page 6). The returns from Portfolio 1 continue to outstrip those provided by both Portfolio 2 and the average returns provided by ‘All’ funds in the Pevara universe for those vintages, maintaining the dominance of macro selection (strategy and geography) over manager selection (page 6).