Despite challenging conditions in global markets, the long-term outlook for private equity investments remains favourable, according to the State Street Corporation.
Based on the March 31 results of the State Street Private Equity Index, swings in private equity valuations and any adverse reactions to quarterly earnings announcements have been tempered by the sustainable management of the underlying investments.
While admitting that private equity wasn’t immune to the turbulence in the financial market in the first quarter of 2008, State Street vice president Gerard Labonte said residual value multiples for the index remained stable.
He also suggested that it would be interesting to watch the future performance of any newly launched funds in this space.
“If recent history is any indication, funds launched in turbulent times can obtain pricing advantages to generate significant long-term results,” he said.
“We’ve noticed that funds launched in 2003, the year of the most recent (public) market bottom, have performed quite well in comparison to their peers.”
