U.S. private equity beat public markets in 2011: survey

Mon Jun 11, 2012 4:26pm EDT

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(Reuters) - U.S. private equity investments outperformed the stock market in 2011 and distributions to investors reached a record as fund managers seized on an opportunity to sell long-held assets, market research firm Cambridge Associates LLC said on Monday.

The Cambridge Associates LLC U.S. Private Equity Index returned 10.9 percent in 2011, compared to 8.4 percent for the Dow Jones Industrial Average and 2.1 percent for the S&P 500, according to data provided by Cambridge.

It was also a good year for private equity investors who wanted money back. Known as limited partners, these investors received $93.6 billion from their fund managers, the largest annual amount in the history of the index and a 30 percent increase over distributions in 2010, Cambridge said.

"The record distributions likely reflect the long-awaited completion of realization events delayed largely due to the recession and buoyed by active M&A and IPO environments in 2011," Andrea Auerbach, head of private investment research at Cambridge Associates, said in a statement.

M&A activity was off to a strong start in the first half of 2011, allowing private equity firms to shed assets. The euro zone crisis later curtailed activity, but global M&A still totaled $2.6 trillion for the entire 2011, a 7 percent increase from comparable 2010 levels, according to Thomson Reuters data.

Technology proved a resilient economic sector within U.S. private equity. Software led the pack in 2011 within the private equity index with an annual return of 17.9 percent, followed by information technology at 17.2 percent and media at 15.9 percent, Cambridge said.

The private equity index also beat out the performance of large public companies in the S&P 500 on a three, five and ten-year annualized basis, although it underperformed on a quarterly basis in the fourth quarter of 2011, Cambridge said.

The Cambridge Associates LLC U.S. Venture Capital Index returned 13.2 percent in 2011, also beating public markets.

Cambridge calculates its indexes based on performance results submitted by more than 4,500 private partnerships and their over 62,000 portfolio company investments.

(Reporting by Greg Roumeliotis in New York; Editing by Phil Berlowitz)

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