Wed, Feb 20, 2019
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Preqin: Dry powder in PE reaches $2tn

Thursday, January 17, 2019
Opalesque Industry Update - At the end of June 2018, private capital dry powder - the capital available for fund managers to deploy - surpassed the $2tn mark to reach $2.10tn. Geographically, the majority of dry powder is still targeting North America, although that proportion has been declining in recent years. However, a steadily increasing proportion of available capital is focused on Asia. The region accounted for 9% of total dry powder in 2006, but in 2018 this has doubled to 18%. Europe-focused dry powder, meanwhile, has remained consistent, accounting for around a quarter of total available capital.

When looking by asset class, a previously diversifying spread of available capital seems to be concentrating towards private equity funds. Private equity accounted for a diminishing proportion of dry powder from 2006 to 2013 as asset classes like private debt and infrastructure grew in prominence, but this trend has reversed in the past five years. Private equity now accounts for 58% of all available capital in the industry, the highest proportion seen since 2012.

Richard Stus, Head of Private Capital Research:

"While $2 trillion in capital waiting to be deployed is a notable landmark for the private capital industry, concerns that fund managers are stockpiling capital without disbursing it may be overblown. Deal activity is up in most asset classes, and the ratio of available capital to called-up capital is flat or falling - in essence, although dry powder is climbing, the rate of spending is climbing faster. In this context, burgeoning dry powder can be taken as a sign of an expanding and diversifying industry rather than one unable to put capital to work.

Certainly, the growth of capital earmarked for Asia is a strong sign of the industry's development in the region, it may also be in part responsible for the increasing concentration of capital among private equity funds: while the private equity and venture capital industries in Asia are robust, other asset classes such as private debt or natural resources have yet to build much of a foothold in the region."

Key Private Capital Dry Powder Facts:

  • Private capital dry powder reached $2.10tn as at the end of June 2018. Private equity dry powder - accounting for the bulk of private capital dry powder - has hit $1.20tn.
  • From 2000 to 2013, private equity accounted for a diminishing proportion of total private capital dry powder, but over the past five years, this trend has reversed: private equity has accounted for a growing proportion of dry powder - 62% as of the end of 2018.
  • At the height of the dotcom bubble in 2000, venture capital accounted for a third (32%) of all private equity dry powder. This had fallen to 13% by 2013, but has since rebounded - in 2018 venture capital dry powder represents a fifth of all available capital in the private equity industry.
  • The proportion of private capital dry powder targeting North America has fallen from 62% in 2000 to 55% in 2018.
  • Meanwhile, the proportion of Asia-focused private capital dry powder has steadily increased over the years, from accounting for 9% of private capital dry powder in 2006 to 18% in 2018.

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. New Launches: Royal London launches new Greetham fund, Direct lending specialist unveils multi-manager credit fund, PeakSpan Capital announces final close for Fund II on $265m, Mubadala's venture capital unit to launch $400m European fund, Lazard offers Scandinavian bond fund[more]

    Royal London launches new Greetham fund From FT Adviser: Royal London's Multi Asset Strategies is the latest fund to be launched for Trevor Greetham and his eight-strong multi-asset team. It targets annualised total returns of cash, defined as the Sterling Overnight Index Average, p

  2. New Launches: AI venture capital firm InReach Ventures launches new $60m fund[more]

    From Telegraph: InReach Ventures, a venture capital firm using artificial intelligence to spot the most promising early stage startups in Europe, has closed a new EUR53m ($60m) fund, as it said the Brexit process would be unlikely to decrease entrepreneurship in the EU. InReach Ventures said it

  3. Outlook: Why Paul Tudor Jones fears a 'revolution', A lot of 'negative surprises' will hit the markets in coming months, hedge-fund veteran Mark Yusko says[more]

    Why Paul Tudor Jones fears a 'revolution' From Institutional Investor: Billionaire hedge fund manager Paul Tudor Jones; Robert Shiller, the Yale University professor who is a co-winner of the Nobel Prize in economic sciences; and DoubleLine Capital's deputy chief investment officer Jeff

  4. Performance: This small Austin based hedge fund founded by a successful Polish entrepreneur is beating market by recognizing growing moats[more]

    From Value Walk: Lukasz Tomicki, the founder of Austin, TX-based LRT Capital, had a life-changing moment after he achieved a degree of success. This led him into the hedge fund business where his emerging strategy has outperformed the major stock and hedge fund indices, he told ValueWalk. How the fu

  5. Opalesque Exclusive: BDO Survey: 89% of GPs expect a downturn within the next two years[more]

    Bailey McCann, Opalesque New York: Private equity appears to be preparing for the worst. 89 percent of private equity fund managers expect a prolonged downturn sometime in the next two years, according to the findings of a newly released survey from BDO. The trade war was cited as a top conce