Bloomberg News

Private Equity Has $937 Billion in ‘Dry Powder,’ Preqin Reports

October 17, 2011

Oct. 17 (Bloomberg) -- Private-equity firms are sitting on $937 billion in unspent capital, with more than 20 percent in funds that usually would have to invest the money within about two years, according to Preqin Ltd.

Funds raised in 2008 have $204 billion in so-called dry powder as economic uncertainty and a tight deal market led them to delay some investing, the London-based research firm said today in a statement. With an average investment period of five years, these funds will be under pressure to put the money to work and avoid asking clients for extensions, Preqin said.

“Recent years have been characterized by private-equity managers delaying their investments for longer than before,” Alex Jones, a Preqin analyst, said in the statement. “The industry could see a repeat of the flurry of deals and exit activity that took place throughout 2010 as managers put this cash to work and realize their investments.”

Private-equity firms are struggling to make acquisitions amid a reluctance by banks to lend. Leveraged buyouts have fallen 12 percent to $87.2 billion this year from the same period a year earlier, according to data compiled by Bloomberg.

About 41 percent of dry powder is held by leveraged-buyout funds, according to Preqin. LBO funds raised in 2008 have about $91.5 billion in unspent commitments, it said.

--Editors: Larry Edelman, Josh Friedman

To contact the reporter on this story: Anne-Sylvaine Chassany in London at achassany@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net


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