Our latest Quarterly Private Equity Performance report shows that after a long period of benign market conditions and strong performance, LBO funds recorded a significant fall in returns during the first half of 2020. The first quarter witnessed a sharp drop, with TVPIs for active LBO funds falling from 1.45x in Q4 2019 to 1.36x. The decrease then continued in Q2 2020, albeit less sharply downward, as the COVID-19 pandemic’s impact on portfolio companies’ value and activity started to materialize. To some extent, managers have included the evolution of listed stock prices in the fair value of investments. However, listed stock prices have subsequently recovered some lost ground. In contrast, net asset values have continued to deteriorate, signaling adjustments due to the virus’s impact on portfolio companies’ operations. So far, this is a significant drop, but not a “crash”.

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