Fund valuations show largest increase since 2007

Aggregate fund values were written up an average of 7.65% in the fourth quarter, the seventh consecutive quarter of positive fund valuations, according to State Street.

Average private equity fund valuations were written up 7.65 percent in the fourth quarter of last year, 108 basis points above Q3 2010, according to statistics from the State Street Private Equity Index.

The upturn in fund valuations marks the seventh consecutive quarter of positive returns, and is the largest quarterly return since Q2 2007.

“Distribution activity during the fourth quarter also points to an increase in exit opportunities with a total of $48.8 billion distributed during the quarter, representing a 181.3 percent increase from the same period a year ago,” State Street senior vice president Suresh Krishnamurthy said in a statement.

The State Street Private Equity Index tracks more than 1,800 private equity funds, largely from the 1990 vintage onwards, on a dollar-weighted basis, meaning that larger funds with a disproportionate amount of investor capital under management represent an equally disproportionate share of the performance in the index.

The “since inception IRR” as of 31 December 2010 was 12.92 percent, a slight increase compared to 12.4 percent in Q3 2010.

The third quarter of 2010 saw an average fund valuation change of 6.57 percent, according to State Street.