The latest research from Private Equity Navigatorsays that the last quarter of 2013 saw an increase in both the sum of capital calls and distributions by PE funds over the preceding quarter. This highlights a period of increased investment and divestment activity, however, with significantly more capital being distributed to LPs than called down (37% less, actually), according to the report.
About USD248 billion was distributed to LPs in 2013, up over the USD 193.6 billion for 2012. The Private Equity Navigator is a unique kind of research activity as it looks at PE from the institutional investors’ point of view, basing part of its analysis of private equity returns on two virtual PE fund portfolios.
The analysts said that while still some way off from the highs of the “golden period of investing”, the PE industry has shown a quick recovery and entered a period of steady returns but the amount invested by PE groups was the lowest in the last 9 years, even lower than in 2009 during the peak of the financial crisis.
That is because GPs are exercising caution, it said, and skepticism towards the economic recovery globally. The report concluded it is indeed a sellers’ market.