US distributions spike 73% in Q2

LP contributions to US private equity funds shrank during the second quarter of 2012 while GP distributions rose dramatically, marking the first quarter in 20 years that distributions outpaced capital calls by more than 2.5x.

US private equity distributions to limited partners shot up 73 percent during the second quarter of the year, the second largest quarterly increase during the past five years, according to new research from consultant Cambridge Associates.

The $28.7 billion of distributions during the quarter was contrasted by shrinking capital calls, which fell roughly 17 percent, to $11.3 billion. The second quarter marked the first time in 20 years that general partners distributed more than 2.5 times the amount of capital they called during a quarter. The largest distribution came from the 2006 vintage funds in Cambridge’s private equity index, whose managers returned 5 percent of total contributed capital back to LPs.

“The second quarter also marked the sixth quarter in a row in which the 2007 funds, the largest vintage in the index, called the most capital,” Cambridge senior consultant Keirston Lawton said in a statement. The 2007 vintage funds are now roughly 70 percent drawn, according to Cambridge.

Cambridge was unavailable for further comment at press time.

In terms of performance, both private equity and venture capital were essentially flat during the second quarter and have posted nearly identical results for the first six months of the year. US private equity returned negative 0.1 percent while the venture capital index returned 0.6 percent during Q2. For the first half of 2012, private equity has returned 5.5 percent, compared to 5.4 percent for venture capital.

Both private equity and venture capital outperformed the public markets, as the S&P 500 recorded a negative 2.8 percent return and the NASDAQ returned negative 5.1 percent during the second quarter.

Buyouts and venture capital continue to outperform the public markets during the one-year, five-year and 15-year investment periods.