Newly-released State Street research has confirmed the anecdotal evidence — private equity is doing it tough amid the current market volatility and tight liquidity.
The State Street Private Edge Index, which includes more than 1,400 private equity partnerships with a total fund size of $1.3 trillion, reveals that the ability for private equity outfits to finance deal flow and achieve exits has been severely constrained.
Commenting on the Index, State Street vice president Gerard J. Labonte said the past two quarters had marked the first series of consecutive negative quarterly returns for the index since the downturn from October 2000 to March 2003.
However, he noted that there had been pockets of relative strength with respect to private equity and that this was because over the past 12 months, there had been the launch of numerous distressed debt funds that had shown an ability to be opportunistic and therefore achieve positive results.
