Earnings data compiled by Bloomberg has revealed that listed PE firms are amassing significant capital ahead of a resurgence in dealmaking, with seven major firms reporting a combined $722bn in dry powder as of 30 June, a 9% increase from the previous year.
Anticipated Federal Reserve interest rate cuts are also expected to further boost the firms’ deal-making capabilities.
Recent years have seen a slowdown in dealmaking due to high debt costs, which led to reduced acquisition financing opportunities – a crucial area for diversified asset managers like Ares Management Corp. With fewer exits, distributions to investors have been low, putting pressure on firms to return capital.
There has been a resurgence in private equity activity in recent months, with KKR acquiring education technology firm Instructure Holdings, Apollo Global Management set to purchase Travel Corp, Blackstone partnering with Goldman Sachs Alternatives to take L’Occitane International private and Carlyle Group buying the operator of KFC in Japan.
KKR executives are optimistic about continued dealmaking, forecasting at least $500m in exits for the current quarter, while Apollo invested a record $70bn in Q2, more than double the amount from the previous year.
While most major private equity firms have reported increases in available capital, Blackstone is an exception, its the firm’s dry powder having decreased as it has allocated nearly $15bn into real estate in the first half of the year – around 2.5 times more than the same period last year.
