Listed private equity stocks rally 47% in two months
Listed private equity stocks have rallied three times more strongly than the UK’s FTSE All Share index since bottoming out in March, indicating that confidence in the sector is returning and an increasing belief that an "Armageddon" has been averted.
The LPX UK index, which tracks listed private equity stocks, has risen 47% since March 25, compared to a 16% rise in the FTSE All Share index. The LPX Europe index has risen 46.5% in the same period.
Both listed private equity indices bottomed out on 9 March and are up 70.5% and 80.4% since then.
Cazenove analyst Christopher Brown said in a report, published today, that the reason for the rally was the result of “a feeling that Armageddon has been averted given the proactive and unprecedented scale of intervention by the financial authorities”.
“The markets appear to be pricing in a quicker recovery than seemed possible just a few months ago,” he said.
However, Brown warned net asset values – the valuation of a listed fund’s underlying assets – would probably continue to fall for funds of funds until later in year. This was because of the delay in valuations of portfolios companies held by funds in which they invest taking time to feed through.
-- Write to Oliver Smiddy at osmiddy@efinancialnews.com
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