2013 was a good year for private equity firms especially when it comes to returning money to the pockets of their backers, the San Francisco Business Times reported. Citing data from Cambridge Associates, the report said private equity firms were able to capitalize on rising markets to profit from their investments and gave back fund investors around $120 billion last year. Cambridge Associates is an advisor to private equity companies.
The $120 billion returned to fund investors compared with the $115 billion given back in 2012 to the pockets of institutional investors like pension funds and university endowments which support private equity funds. The report said that the good performance of private equity is good news for the Bay Area because of the industry's presence in the region. The investors who made money from their private equity holdings also have a good chance of investing into the asset class again.
Private equity giant Blackstone Group is one of the biggest winners for this year. Blackstone generated a paper profit worth $8.5 billion when it recently took Hilton Hotels public. The firm once wrote down its investment in the hotel chain to 70 cents on the dollar, the report said.
The report added that the wealth of private equity firms is further bolstered by the low interest rate policy of the Federal Reserve since it is now less expensive to give debt in order to pay large dividends to private equity owners. In addition, the stock market was also boosted to record highs in 2013 because of the Fed's policy, the report said.
A Wall Street Journal report Tuesday, December 31, quoted Apollo Global Management Founder and Chief Executive Officer Leon Black as saying in an April conference, "There's a time to reap, and there's a time to sow. We're selling everything that's not nailed down."
Join the Conversation