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Private Equity Activity Slows In 2016 Q1

Exits and fundraising volumes fall from fourth quarter heights but remain consistent with first quarter trends

WASHINGTON – Today, the Private Equity Growth Capital Council (PEGCC) released its 2016 Q1 Private Equity Trends Report, providing an overview of industry activity for the first quarter of 2016. According to the report, investment volume and deals declined 15 percent quarter-over-quarter, while equity financing increased 11 percent.

“The results of the Q1 Trends Report show private equity’s resilience in the face of volatile equity markets,” said PEGCC President and CEO Mike Sommers. “Private equity managers and their partners are committed to the long-term, and it’s this approach that steadily grows our economy and supports the retirement security of our teachers, firefighters and police officers.”

Bronwyn Bailey, PEGCC Vice President of Research, noted that the cooling of private equity activity is not unusual for historical first quarters.

“The decrease in the three fundamentals: volumes of exits, fundraising, and investments, comes after near historical peaks in the fourth quarter,” said Bailey. “With healthy fundraising and records exits in 2015, private equity firms are continuing to grow their capital reserve bases, raising the potential to shift focus on increased investment activity later in the year.”

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

  1.  PE Investment Volume Slows: U.S. private equity investment volume dropped from $144 billion in 2015 Q4 2015 to $122 billion in 2016 Q1.
  2.  Equity Contributions Increase: Total equity financing for U.S. leveraged buyouts increased to 47 percent in 2016 Q1.
  3.  Fundraising Falls: Annual U.S. private equity fundraising volume decreased from $77 billion in 2015 Q4 to $59 billion in 2016 Q1.
  4.  Dry Powder Continues To Grow: Callable capital reserves (“dry powder”) of global buyout funds rose from $460 billion in 2015 Q4 to $496 billion in 2016 Q1.
  5.  Exit Volumes Drop: Annual U.S. private equity exit volume decreased from $129 billion in 2015 Q4 to $64 billion in 2016 Q1.

About the Private Equity Growth Capital Council

The Private Equity Growth Capital Council (PEGCC) is an advocacy, communications, member services, research organization, and resource center established to develop, analyze, and distribute information about the private equity and growth capital investment industry and its contributions to the national and global economy. The members of the PEGCC consist of the world’s leading private equity and growth capital firms united by their commitment to growing and strengthening the businesses in which they invest. More information about the PEGCC can be found at www.pegcc.org.