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Private equity dry powder reaches record levels

20 Dec 2013

TPrivate equity firms are sitting on a record $1.074t of “dry powder”, or capital committed by investors that has yet to be deployed, according to a recent report.

The level of dry powder has exceeded the previous all-time high of $1.067t seen at the end of 2008.

Fundraising saw significant growth in 2013, while the value of exit deals also increased, however, deal volume was little changed from the previous two years, said Preqin.

The total value of buyouts reached $264.4bn in 2011, $263.8bn last year and $265.8bn in the year to date, raising concerns about private equity firm’s ability to deploy their capital.

Head of private equity products Ignatius Fogarty said, “At this record level of dry powder and deflated deal market, investors are concerned that fund managers will still face challenges investing this growing capital base successfully going forward.

“As many economies go through periods of stabilization, and experience continued growth, 2014 may present more opportunities for private equity firms to deploy their capital, and we may see a reduction in the level of dry powder.”

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