Second Quarter PE Index Released

On August 16, the PEGCC released its Private Equity Index (PE Index) for Q2 2011, a metric designed to provide an accurate snapshot of the state of the private equity market.  For the second quarter, the PE Index remained above its 10-year moving average of 100, registering at 103.8.  This is slightly below its revised level in the previous quarter of 104.7.  Some other highlights from the data found:

  • The dollar volume of global private equity-backed mergers and acquisitions (M&A) increased by 28.3% from the previous quarter to $67.5 billion.
  • Equity contributed by sponsors in leveraged buyout deals increased to 37.0%, on average.
  • Global buyout funds raised $27.8 billion, a 7.0% decrease from the previous quarter.
  • Global callable capital reserves (“dry powder”) continued to decline, reaching $391.4 billion as of July 2011.

The PE Index is a composite measure of global private equity activity based on four key factors: total direct investment (including equity contributions to acquisitions and minority stakes, public equity investments, and other corporate financing); buyout transaction volume; fundraising; and the dollar value of private equity exits (portfolio company IPOs or sales to corporations or other investors).  The Index measures 100 when all four components are at their ten-year moving average.  These four factors were chosen to make up the index because collectively they capture the most fundamental elements of the private equity market.

Read about the Index in The Wall Street Journal’s “Deal Journal” blog here.