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Dear Reader The annual Performance of European Private Equity report showcases the returns private equity and venture capital delivers to investors:
🔸 Buyout funds: 15.17% net IRR since inception
🔸 Growth funds: 15.34%
🔸 Venture funds: 12.13%
In the euro zone, inflation fell to its lowest level in more than two years at 2.9%. A year ago, the inflation rate was still a horrendous 10.6 %. This reinforces our view that we will see up to three to four key rate cuts in the next twelve months. The main job is done, now it's a matter of fine-tuning.
A similar situation can be observed in the United States of America. On both sides of the Atlantic, central banks are stressing that it would be "absolutely premature" to think about key rate cuts. The restrictive monetary policy is gradually taking full effect, and indeed it is important not to let up too soon.
But the sharp drop in inflation naturally raises expectations of key rate cuts, which are usually anticipated on the capital market. The market likes this discussion. After all, falling inflation rates, lower interest rates and capital market returns are ultimately the key to higher economic growth again in the future. They are also the drivers in the (levered) M&A business and are reviving private markets. All investors in real assets benefit from this. I truly believe we are in the midst of a fundamental improvement in the framework conditions for venture capital, private equity, IPOs, and so on.
Happy Weekend!
Maurice Pedergnana
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