PrEQIn Private Equity Quarterly Index: Distressed Private Equity – October 2013

by Emma Underwood

  • 07 Oct 2013
  • PE
  • PD

While standard private equity performance metrics such as the IRR and the multiple can be very useful tools, PrEQIn has developed an alternative measure providing a different, but extremely valuable, insight in to private equity fund performance: the PrEQIn Private Equity Quarterly Index. It captures in an index the returns earned by investors on average in their private equity portfolios over time, based on the actual amount of capital invested in private equity partnerships. Preqin has calculated various indices which cover the whole of the private equity industry and the various investment strategies within it, of which the PrEQIn Distressed Private Equity Index is one.

The PrEQIn Distressed Private Equity Index uses cash flow transactions and NAVs reported for 216 individual distressed debt, turnaround and special situations partnerships which have collectively raised aggregate capital worth over $245.7bn.

When the PrEQIn Distressed Private Equity Index is rebased to 100 as of 31 December 2000, it shows that these fund types have consistently outperformed the private equity asset class as a whole. The index shows steady quarterly increases between Q4 2000 until Q3 2007, at which time all private equity fund types experienced quarterly write-downs on the value of their portfolios during the period of financial dislocation that followed the crisis. Since Q2 2009, distressed private equity has recovered at a faster rate than all other private equity strategies as a result of the distressed opportunities that were borne out of the financial crisis. As of Q1 2013, the index reached its highest point of 395.6; compared to the PrEQIn All Private Equity Index which stands at 234.4 as of Q1 2013.

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