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Private Assets in Focus: Senior Debt on Top; PE Distributions Up
Senior-debt funds registered the highest annual return of the major private-asset classes in 2023, with mezzanine-debt funds posting the second-highest return, according to the Q4 2023 update of Burgiss Manager Universe data. In private equity, buyout funds outperformed venture capital, which posted a negative return. Private-real-assets funds showed mixed results, with infrastructure and natural resources showing positive returns, while real estate was down.
On a quarterly basis in Q4 2023, venture capital reversed a seven-quarter streak of declines, posting a 1.2% return. Venture-capital funds had dramatically outperformed all other asset classes during 2020 and 2021 but have since underperformed, with a cumulative return for the 16 quarters since 2019 now about tied with buyout funds.
Distributions in private equity improved, still below prior norms
The slow pace of distributions remains a concern for limited partners in private-equity funds: Newly raised funds continued to call capital while distributions from mature funds have been muted since 2022. Private-equity funds did post the highest quarterly distribution rate of 2023 during Q4 (10.8% annualized), but the full-year 2023 distribution rate of 9.5% was well below the 2015-19 average of 23.6% and even below 2022’s rate of 11.8%.
Senior and mezzanine debt topped major asset classes
Signs of life in private-equity distribution rates
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