The private2000® index tracks the monthly performance of 2,000 private companies across 30 key markets and is designed to mirror a globally diversified private equity portfolio. It generated a robust 4.20% return for the quarter ending September 30, 2024, including a 0.72% return in September for the value-weighted version. This performance marks a rebound from the previous quarter’s subdued results, bringing the year-to-date return to 4.45%.

Among the highlights of Q3 2024:

• Key performance drivers: Strong performance in the Information and Communication (up 9.18% YTD) and Professional Services sectors (up 3.39% YTD) propelled the index. Geographically, the Americas led the way, consistent with the index’s weighting.

• Sector and geographic breakdown: The index is heavily weighted towards Information & Communication (24.0%) and Professional Services (21.0%). Geographically, the US dominates with a 46% allocation.

• The PECCS® framework: The index leverages the PrivatE Company Classification Standard (PECCS®), which classifies private companies across five dimensions (industrial activity, lifecycle phase, revenue model, customer model, and value chain type), offering granular insights into performance.

• Strong USD and size of the companies influence long-term performance: The Local Currency (LCU) version of the index has generally performed better over longer horizons due to USD strengthening. Similarly, equally-weighted (or EW) indices have historically underpeformed their value-weighted (VW) counterparts, suggesting larger private companies have generated a higher portion of returns. However, in September 2024, the EW index and the USD index slightly outperformed the VW and LCU indices, respectively, returning 0.75% versus 0.72%.

• Information and Communication (AC05) was the top-performing sector in September 2024. Over a longer time frame, Natural Resources (AC07) and Manufacturing (AC06) have delivered strong returns. Health (AC03) has been the least volatile sector, followed by Education and Public (AC01) and Retail (AC10).

• Subscription-based revenue models and companies in the Americas drove index performance in September 2024. Also, Business-focused, mature, and service-oriented companies were key contributors to index performance.

• Valuation drivers: Third quarter 2024 private market performance was buoyed by expanding valuations in private market transactions, coupled with narrowing term spreads, and robust public market valuations in the U.S.

Outlook: The outlook for private markets is cautiously optimistic. The Federal Reserve’s recent move to lower interest rates, combined with signs of cooling inflation, suggests a more favourable environment for private market investments. However, investors should closely monitor the factors outlined in this report, as they will play a crucial role in shaping the private markets’ trajectory.

Read the full analysis here.

Find out more about the private2000 index here.