July 25, 2024
Private Equity: Lots of Dry Powder in Relatively Few Hands
According to a recent Institutional Investor article, private equity funds are sitting on a mountain of dry powder – or at least some of them are. The article says that PE & VC funds have added nearly $50 billion to their cash reserves since December 2023. That’s double the amount they added during the previous 12-month period and brings the amount of dry powder to more than $2.6 trillion. But this excerpt says that the wealth hasn’t been shared equally – and that the big boys have raked in a disproportionate amount of the spoils:
Record dry powder is not a proxy for the health of the private equity and VC industries. A short list of the largest managers accounts for a disproportionate share of the cash. The 25 firms with the largest war chests collectively have $556.19 billion of uncommitted capital, more than 21 percent of all dry powder globally, according to S&P Global Market Intelligence. Topping the list of managers are KKR (which has had a celebratory five-years stretch) and Apollo Global Management, which each have more than $40 billion in dry powder. Ten others have at least $20 billion and the rest have at least $12 billion.
Overall, the rise in the amount of funds available for investment is a sign of renewed optimism about the deal market, but the article notes that fund managers aren’t out of the woods yet – capital is still a lot more expensive than it was a few years ago and the divide between buyers and sellers on valuation is still pretty wide.
– John Jenkins