Preqin: Private Capital Industry AUM Hits Record $4.46T

Jan 31 2017 | 10:52pm ET

Total assets under management in the private capital industry, which includes private equity, private debt, real estate, infrastructure and natural resources funds, reached $4.46 trillion as of June 2016, according to industry data provider Preqin.

The data was included in Preqin’s 2017 Global Private Equity & Venture Capital Report. Total private capital AUM was $4.17 trillion at the end of 2015.

Assets in private equity, which Preqin defines as private capital funds adopting buyout, growth, venture capital and other closely related strategies, as well as secondaries vehicles and funds of funds, reached a record $2.49 trillion as of the same date. The figure caps eight consecutive years of private equity industry asset growth in the wake of the financial crisis. 

Strong fundraising has driven this latest growth in private equity assets, Preqin said in a statement. The dry powder component of industry AUM increased by $117 billion in the first six months of 2016, while the total value of assets held by fund managers (the unrealized value component of AUM) fell slightly.

Other highlights from Preqin’s report: 

  • The global private equity industry has doubled in size over the past decade, rising from $1.16tn in assets as of the end of 2006. 
  • The rate of growth in industry assets has accelerated in recent years: total AUM grew by 2.5% in 2014. This pace increased to 6.6% in 2015 and was 4.2% in the first half of 2016.
  • Dry powder levels have risen consistently, reaching a peak of $869 billion at the end of H1 2016. This represents an increase of 16% compared to December 2015.
  • Strong fundraising has seen private equity funds secure over $1 trillion in the period 2014-2016, driving dry powder levels and competition for assets up. 
  • Consequently, dry powder accounts for the bulk of recent AUM increases: the total value of invested assets held by fund managers fell 1% in H1 2016, indicative of the level of capital that fund managers have distributed back to investors. 
  • Annual distributions exceeded $400bn in both 2014 and 2015, and reached $257bn in H1 2016, a record pace. 
  • The rate of capital being returned to investors is promoting a high level of satisfaction; 95% of investors said in December 2016 that private equity had met or exceeded their expectations in the past year.

“2016 was another stellar year for the private equity industry, and total AUM now stands at a record $2.49 trillion as of June,” Christopher Elvin, head of private equity products for Preqin. “The industry is well positioned for another strong year in 2017. In a low-interest-rate environment, the asset class continues to appeal to investors looking for high absolute returns and portfolio diversification. 

“This is borne out in the state of the market going into 2017,” he continued. “Investor sentiment is extremely high, and there are currently record numbers of funds seeking investment. Many investors are looking to redeploy the capital returned to them back into the asset class, which in turn is stoking an active fundraising market. While asset pricing remains a very real concern for both fund managers and investors, 2017 has the potential to match the successes seen in 2016.”

Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. More than 40,000 professionals in 90 nations use the company’s products. 

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