February 13, 2013

PE Index: Private Equity Surges in Q4 2012

Bailey: “Private equity activity was a bright light in the United States economy during the fourth quarter, increasing investments in promising companies poised for growth…”

During the same quarter that economic growth slowed in the United States, private equity expanded to a level not seen since before the financial crisis.  The Private Equity Growth Capital Council’s Private Equity Index (PE Index), which measures overall private equity activity in the U.S., increased 23 percent to 123.9 during the fourth quarter of 2012.  This is the index’s highest level since the third quarter of 2008.

“Private equity activity was a bright light in the United States economy during the fourth quarter, increasing investments in promising companies poised for growth and in need of a turnaround,” said Bronwyn Bailey, PEGCC Vice President of Research. “In the fourth quarter, economic activity receded, yet private equity investment topped $102 billion and returned more than $55 billion in the fourth quarter to its investors which include pension funds, charitable foundations and university endowments.”

Key findings about the private equity activity in the fourth quarter of 2012 include:

- Quarterly U.S. private equity investment deal volume increased from $66 billion in the third quarter of 2012 to $102  billion in the fourth quarter.

- Average equity contributions increased from 36 percent in the third quarter to 37 percent in the fourth quarter.

- Fundraising volume increased from $30 billion in the third quarter to $33 billion in the fourth quarter.

- Exit volume increased from $29 billion in the third quarter to $55 billion in the fourth quarter.

The full report can be found here

About the PEGCC Private Equity Index

Designed to provide a snapshot of the state of the private equity market at any given point in time, the PE Index is a composite measure of U.S. private equity activity based on three key factors: the dollar value of total private equity-backed investment, fundraising, and exits (portfolio company IPOs or sales to corporations or other investors). The Index measures 100 when all three components are at their 10-year moving average. These three factors collectively capture the most fundamental elements of the private equity market.

The Private Equity Index is calculated using data provided by Thomson Reuters and PitchBook. The Council updates the PE Index at the end of each quarter.