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Buyout Funds Dry Powder

by Manuel Carvalho

  • 09 Sep 2009
  • PE

In our forthcoming September edition of Preqin Private Equity Spotlight, our free monthly newsletter covering the global private equity industry, we look at the amount of dry powder available to buyout firms in an in-depth article.

Our analysis reveals that the amount of buyout dry powder available globally has increased year on year since December 2004. Between December 2004 and December 2008, the amount of dry powder available to buyout firmss globally has increased from $178 billion to $501 billion. As of September 2009, there is an estimated $508.5 billion in buyout dry powder available globally, an indication that this trend is set to continue until at least the end of this year.

In relation to dry powder by region, US focused buyout funds have persistently possessed the largest amount of dry powder, followed by European focused buyout funds, and lastly Asia and Rest of World focused buyout funds. As of September 2009, there is an estimated $278.7 billion of buyout dry powder available to US focused funds to invest, with European buyout funds possessing $169.6 in dry powder, and Asia and Rest of World buyout funds having $60.1 billion in dry powder at their disposal.

In relation to dry powder available to by fund size, mega buyout funds (those with capital commitments of more than $3.5 billion) have seen levels of dry powder increase drastically between December 2004 and December 2008, swelling from $39 billion to $267 billion, or 586%, in this time period. Estimated figures for September 2009 show that these levels of dry powder look set to persist for mega funds. Smaller buyout funds have not seen the same explosion of dry powder in this time period. Using December 2004 as a starting point where all fund sizes had roughly equal amounts of dry powder, large buyout funds have seen an increase in dry powder of 110% to December 2008. Mid market buyout funds experienced an increase of 68%, while small buyout funds saw an increase of 17%. These figures confirm that over the past half-decade the larger the buyout fund, the more dry powder that has become available to invest.

More information, including a ranking of the Top 10 Firms by Buyout Dry Powder, will be included in our forthcoming September edition of Private Equity Spotlight. If you are not signed up, then please visit our registration page.

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