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High Capital Reserves Position Private Equity For Significant Activity

The Industry’s Capital Reserves Reach Historic High In Q2 2017

WASHINGTON – Private equity capital reserves grew to $572 billion, the highest level since 2003, according to the American Investment Council’s (AIC) 2017 Q2 Private Equity Trends report, released today.

“With this level of reserves, the private equity industry is poised to deploy considerable capital to help businesses grow, create jobs, and boost our economy,” said AIC President and CEO Mike Sommers. “Today, private equity funds and their partners are investing in key and often under-served industries in every state, while delivering strong, consistent returns for investors.”

In addition to high levels of dry powder, Q2 2017 saw total equity financing for leveraged buyouts rise to 42 percent. The $55 billion raised in Q2 also exceeded average quarterly fundraising in 2016 ($49 billion) by approximately 12 percent.

Meanwhile, investment volume dipped and exit volumes fell slightly from $72 billion in Q1 to $69 billion in Q2.

“Historic levels of dry powder shows investor confidence in private equity’s long-term returns,” said Bronwyn Bailey, AIC Vice President of Research and Investor Relations. “Despite a quarterly decline in investment, the growth in capital reserves and strong fundraising would suggest greater activity in the second half of 2017.”

Below are key findings from the report. Read the full report here.

  1. U.S. PE Investment Volume Falls: U.S. private equity investment volume dropped to $141 billion in Q2 2017 from $155 billion.
  2. Equity Contributions Increase: Total equity financing for leveraged buyouts increased to 42 percent in Q2 2017, an increase from 41 percent in Q1.
  3. U.S. Fundraising Drops: U.S. private equity fundraising volume declined 15 percent, from $65 billion to $55 billion in Q2 2017.
  4. Dry Powder Remains Steady: Callable capital reserves of global buyout funds rose from $540 billion in April 2017 to $572 billion by July 2017.
  5. Exit Volumes Increased: U.S. private equity exit volume fell from $72 billion to $69 billion in Q2 2017.

About the American Investment Council

The American Investment Council (AIC) is an advocacy and resource organization established to develop and provide information about the private investment industry and its contributions to the long-term growth of the U.S. economy and retirement security of American workers. Member firms of the AIC consist of the country’s leading private equity and growth capital firms united by their successful partnerships with limited partners and American businesses. More information about the AIC can be found at www.investmentcouncil.org.