Evidence Of Another Thing We Know

Earlier today, I posted some S&P data about how leveraged loan defaults are on the rise. It’s one of those things that we already knew, but it was nice to have some statistical support.

In that same vein, someone just sent over some JPMorgan data showing that private equity distributions fell off a cliff in 2008. It’s from the firm’s Private Equity Distribution Maangement group, which handles stock distributions for JPMorgan’s internal funds-of-funds, plus for 18 outside clients. Seems like a large enough sample to be fairly representative, although I guess it’s possible that JPMorgan and its clients have disproprortionately lousy PE portfolios.

The group reports that it received 112 distributions in 2008, which is the lowest level since 2004. Of those, only 29% were sold for a gain. Thirty-four of those distributions came in Q4, with just 15% being gainers. The busiest sectors were electronic technology (22) and health technology (20), but both were well down from 2007 totals (44 and 35, respectively).

JPMorgan also unveiled a new index designed to “provide a benchmark for comparing returns from our managed portfolio of private equity stock distributions.” It stood at -40.2% in 2008, compared to 14.9% in 2007 and 23.8% in 2006. Here’s a related chart of the index, which is calculated by S&P: