Preqin’s latest update on private equity reports that 2015 witnessed record levels of capital distributions (USD443 billion), surpassing that of the previous record high in 2014, when fund managers return USD424 billion to investors.
2015 also marks the fifth consecutive year in which capital distributions outstripped capital calls, Preqin writes. With these high levels of distributions currently seen in the industry, it seems that investors are still committed to the asset class: over half (56 per cent) of investors active in private equity are planning to increase their allocation in the longer term.
“Furthermore, private equity dry powder continues to reach record levels and currently stands at USD839 billion, up from the USD818 billion reported at the end of Q2 2016.
“In light of the increased level of capital available to fund managers, portfolio company valuations have increased quarter-on-quarter, with the average buyout deal size in Q3 2016 (USD405 million) increasing 9 per cent from the Q2 2016 figure (USD372 million).
“Despite this increase, aggregate global private equity-backed buyout deal value stayed relatively steady at USD90 billion, similar to the USD89 billion seen in Q2. Notable deals completed in Q3 2016 include the USD4.4 billion deal for Israel-based Playtika Ltd, the second largest buyout deal ever outside North America, Europe and Asia, as well as the high-profile deal for Ultimate Fighting Championship worth USD4 billion.
“However, global venture capital activity slowed noticeably in the third quarter of 2016: the number of deals (2,050) and aggregate deal value (USD26 billion) decreased 12 per cent and 37 per cent respectively from the previous quarter. Despite this, Q3 2016 saw the launch of China State-Owned Capital Venture Investment Fund in August 2016, a vehicle targeting CNY 200 billion (approximately USD30 billion) for venture capital investment in China. Should this fund achieve its target, it would be the largest private equity fund ever raised.
“The USD62 billion secured by the 170 funds closed in Q3 2016 represents a 22 per cent decrease from the USD80 billion secured by funds closed in Q3 2015. However, private equity fundraising in the longer term remains strong: funds closed in the first three quarters of 2016 have secured an aggregate USD253 billion, a larger amount than that secured by funds closed in the same period in 2015 (USD213 billion).
