Private equity funds returned US$568 billion in capital back to their institutional investor backers globally last year, up significantly from US$381 billion in 2012. It is also the highest annual total capital return ever recorded, according to data released by private equity research Preqin.
Strong public equity markets, good credit conditions and positive exit activities are the main drivers behind the record distributions back to limited partners (LPs) in 2013.
"Institutional investors in private equity are likely to be pleased with their portfolios at present, following a record year of distributions and the asset class producing strong returns on average," says Christopher Elvin, head of private equity products at Preqin.
In 2013, private equity firms realized 1,456 exits valued at a total of US$322 billion worldwide, notably up from 1,360 exits with aggregate value of US$289 billion in 2012.
Global private equity assets under management now stand at US$3.7 trillion as of December 2013, up 14% from the end of 2012. In addition, private equity funds produced 18.0% returns on average in 2013, compared with median net internal rate of return (IRR) of 20% over a ten-year period.
"(We) have witnessed positive momentum in the fundraising market carry over into 2014, and with investor sentiment generally positive towards their private equity portfolios," adds Elvin. "It is likely many of these investors will be returning a proportion of those distributions back into re-ups or new investments."