Tags: private | equity | better

Private Equity Doing Better, But Barely

Friday, 13 Jun 2008 10:11 AM

LONDON, June 13 (Reuters) - Quarterly returns on private equity investments improved slightly in the three months through December 2007, data showed, but stayed close to a third-quarter trough as the sector struggles with the credit crisis.

Fourth-quarter returns were 3.18 percent on average, a survey by financial services group State Street Corp (STT.N: Quote, Profile, Research, Stock Buzz) showed, slightly above 2.26 percent in the third quarter of 2007, but well below 10.89 percent in the year-ago period.

"The overall index return ... lagged significantly behind the fourth-quarter 2006 return ... thereby illustrating the challenging conditions experienced during the latter part of 2007," the group said in a statement on Friday.

Leveraged buyout deals -- by far the biggest part of the private equity industry -- have slowed to a trickle in the wake of the credit crisis, as banks tighten the reins on lending.

Buyout firms borrow heavily to fund deals, typically funding their bids with a majority of debt.

The State Street data are based on client data comprising public and private pensions, endowments and foundations, representing a value of more than $160 billion.

Pressure on valuations was continuing in the fourth quarter, State Street said, though the weak dollar was helping U.S. investors exposed to overseas deals.

© 2015 Newsmax. All rights reserved.

1Like our page

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved