Arizona State Retirement System noted a significant drop in the value of buyout deals during the third quarter, along with a fall in private equity returns throughout the investing universe.
Many LPs have either reported markdowns in the third quarter or have braced themselves for bad news. According to a presentation at Arizona’s most recent investment committee meeting, third-quarter buyout deal values are down by $100 billion compared with the first three months of the year.
The presentation about private equity was made at Arizona’s most recent investment committee meeting held on November 28. Buyouts watched a webcast of the meeting.
According to data attributed to Preqin, aggregate buyout deal value in the third quarter stood at $92.2 billion. This compares with $192 billion in the first quarter of 2022 and $159.5 billion in the second quarter, according to Arizona’s presentation.
Buyout deal multiples stood at 11.3x in the third quarter, compared with 11.9x in the second quarter and 13.5x in the first quarter.
“It’s a healthy correction and private markets still need time to digest some of the public market corrections and valuations,” said Arizona deputy CIO Samer Ghaddar.
Ghaddar said he expects this trend to continue in the months ahead.
“Some investors feel these valuations are not attractive to sell and this needs time to adjust,” Ghaddar said.
The $48.2 billion system currently allocates 12.68 percent of its total fund to private equity.