The private equity sector saw a decline in activity in the third quarter of 2016, but its returns are beginning to improve, according State Street Global Exchange.
The company’s GX Private Equity Index, which uses directly sourced limited partnership data form a comparative analysis benchmark, saw an overall return of 3.8 per cent for the third quarter of the year.
“Following record years of exit activity in 2014 and 2015, private equity firms are cautiously putting money to work,” said State Street Associates senior managing director and global head Will Kinlaw.
“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 index found that buyout had been the most successful strategy, with a one-year return of 10.38 per cent as of Q3, private debt and venture capital returned 6.13 per cent and 4.72 per cent respectively.
Venture capital saw the biggest returns growth, posting a 3.72 per cent quarterly gain, up from 0.28 per cent in the second quarter, the company said, with buyout funds gaining 3.86 per cent, up from 3.41 per cent, and private equity funds gaining 3.59 per cent, up from 2.61 per cent in the previous quarter.