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Laxman Pai, Opalesque Asia: Historically high levels of dry powder are still available after a couple of years of buoyant fundraising, said Preqin Risk Monitor report.
"As private markets face the chilly headwinds coming from the financial market and geopolitical uncertainty, record levels of dry powder could be a factor helping to warm the performance of 2022 and 2023 vintage funds," said the study.
Buyout funds raised a total of $360.3bn in 2021, the second-best year for fundraising in the last 10 years, trailing only 2019's $410.7bn. Fundraising in 2022 then regressed to the mean, with most of the $309.6bn being raised in the first half of the year.
"Dry powder reserves grew to $979.3bn in the first half of 2022, as total buyout assets under management (AUM) rose to $2.3tn," the study noted.
The reservoir of capital could help limit downside performance, according to the report's author, Curtis Pack, Senior Vice President at Preqin company Colmore. He says that investors in private markets have encountered difficult market conditions before, providing them with an opportunity to utilize lessons learned from previous experience.
"Notwithstanding the current drama in the banking sector and the possibility of a further shake-out of private equity-backed companies, investors in private markets are generally taking comfort in the fact that they've seen this before," the report says. "They are taking a risk-on approach to 'buy the dip', ra...................... To view our full article Click here
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