(February 14, 2013) — Private equity investment expanded during the fourth quarter of 2012 to a level not seen since before the financial crisis, according to a recent study.
The research comes from the Private Equity Growth Capital Council’s Private Equity Index (PE Index), which measures overall private equity activity in the US. The firm found that such activity increased 23% during the fourth quarter of 2012.
“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 a statement. “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.”
According to the research, quarterly US private equity investment deal volume increased from $66 billion in the third quarter of 2012 to $102 billion in the fourth quarter.
At the same time, average equity contributions increased from 36% in the third quarter to 37% in the fourth quarter.
Another measure of growth: Quarterly US private equity fundraising volume rose from $30 billion in Q3-2012 to $33 billion in Q4-2012.
PE Index’s bright outlook for the asset class comes after a recent report by Towers Watson, that showed institutional investors increased their allocations to alternative assets by 70% over the last two years, with a determined push towards direct holdings. Macro, fixed income, and reinsurance funds gathered the most assets last year, with inflows mainly coming through direct investments. Real estate, private equity, and infrastructure funds also received predominantly direct inflows, the consultant said.