Capital waiting to be deployed in the private equity market, or the so-called dry powder, rose 8% over the past year to a record $2.59 trillion, S&P said Tuesday.
S&P said the mountain of unused capital in the sector comes after a slow year in dealmaking “with limited opportunities” for companies that have raised money from investors in recent years.
Also read: Private equity: everything you always wanted to know about this $12 trillion asset class but were afraid to ask
The dry powder, the unemployed capital of private equity firms, is up 8% over the past year, in a subdued M&A environment.
S&P
Apollo Global Management Inc. SIR,
leads the list with $55.1 billion in dry powder, followed by $43.2 billion for KKR & Co. KKR,
$39.44 billion for CVC Capital Partners and $30.9 billion for Ardian.
Blackstone Group Inc. BX,
ranks fourth with $29 billion in dry powder, followed by $27 billion for Carlyle Group Inc. C.G.,
$24.2 billion for Clayton, Dubilier & Rice LLC, $24 billion for Hellman & Friedman LLC and $23 billion for TPG Inc. TPG,
“The record accumulation of dry powders is rooted in the robust M&A market in recent years,” S&P said.
M&A activity before 2022 drove high valuation expectations for sellers, which remained high even as macroeconomic conditions increasingly slowed deal activity from last year, S&P said.
In a separate study, financial technology company and broker-dealer Percent Securities LLC said the dry powder in the private credit space is now tipping the balance sheet at $1.3 trillion, or about 25% of all capital available for investment.
“The high dry powder among allocators indicates that momentum will only continue to accelerate as companies continue to focus on the asset class,” said Nelson Chu, founder and CEO of Percent. “We are already seeing some interesting trends on the Percent platform that foreshadow the ways in which allocations and deal types will shift in 2024.”
Also read: Why wealthy investors poured $125 billion into this new type of private equity fund last year