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Rapid growth propels venture capital AUM crosses the $2tn barrier

Thursday, May 19, 2022

Laxman Pai, Opalesque Asia:

Venture capital (VC) becomes the second private capital class to hit $2tn assets under management (AUM), said a study.

According to Preqin, VC AUM has hit $2.03tn as of September 2021, the most recent date for which the calculation is possible.

The VC segment is still a third of the size of private equity, which had an AUM of $6.03tn as of September 2021, but has grown faster, with a compound annual growth rate (CAGR) of 20.2% since the end of 2012 (9.75 years), compared to 11.5% for private equity, said the report.

The proportion of private equity & venture capital (PEVC) AUM in venture capital has risen from 14.0% in 2012 to 25.2% at the end of 2021.

However, there has been a significant acceleration in growth in recent years, with VC recording a CAGR in AUM of 40.4% since the end of 2019 (2.75 years), against 23.7% for private equity.

"The big question is whether this growth will continue or whether it might slow or even reverse, given that the calculation predates the slide in technology stocks and that the sector faces significant headwinds," pointed out the report.

Preqin's calculation of AUM in private capital has two components: dry powder and unrealized value. Dry powder is an up-to-date number, calculated as the amount of capital that has been committed to funds minus the amount that has been called by GPs for investments, and has risen from $387bn in September 2021 to $496bn on 6 May 2022.

Unrealized value......................

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