Friday, March 13, 2009

Reuters: Private equity returns fall 25 pct in 2008-study

"European private equity returns were 25 percent lower in 2008 as company valuations fell and exits dried up, according to data released on Friday by Thomson Reuters and Europe's private equity trade body.

Mega buyouts were hardest hit over the short-term, with the fall in net asset value 27.1 percent to year-end, while mid-market buyouts were 17.9 percent down over the year.

"Macro-economic conditions have precipitated a sharp slump in distributions, particularly since 2008, with exit markets particularly difficult," said Javier Echarri, secretary general of the European Private Equity and Venture Capital Association.

Distributions are the monies returned to investors when a private equity firm sells one of its portfolio companies.

Echarri said short term returns for existing private equity portfolio companies are expected to fall further in the near-term but said investments made in the downturn have historically been the best performers."

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