State Street Global Exchange Private Equity Index (GXPEI) continued its gains going into 2017, rising 3.95% in the first quarter representing the highest quarterly return in two years. The increase was driven by the strong performance of buyout funds and private debt, along with a significant improvement in Venture Capital.
Overall the index has continued to see positive net cash flows to investors in Q1 going into Q2 with contributions remaining steady and low while distributions have increased slightly as compared to the same period of 2016.
The GXPEI is based on directly sourced limited partnership data and represents more than $2.5trn in private equity investments, with more than 2,700 unique private equity partnerships, as of March 31 2017.
“We saw some pick up in venture capital performance in the first quarter of 2017, driven largely by higher returns in the information technology sector, which comprises close to 40% of venture capital funds overall in the State Street dataset,” said Will Kinlaw, senior managing director and global head of State Street Associates, a division of State Street Global Exchange. “As the S&P technology sector index recently surpassed its dot-com era high, it is not surprising that venture capitalists are gaining more confidence in technology start-up.”
“Over the past few years, the dry powder has been steadily increasing as a result of strong inflows from the limited partners and cautious capital calls by the general partners,” said Anthony Catino, managing director, Alternative Investment Solutions for State Street. “As of Q1 2017, we saw some early signs of a trend reversal as the total dry powder, which dropped from a peak of $488bn in May 2016 to $461bn in March 2017.”