Download global dry powder continues to stack up

MARKET
TOUCHPOINTS
JUNE 2016
Asante Capital is a leading independent
private equity placement and advisory group
focused on partnering with best-of-breed fund
managers in both developed and emerging
markets.
ROAD WARRIORS
YTD 2016
414
FINAL
CLOSES
What is the typical time frame to
raise a private equity fund? This is a
common question amongst managers looking to raise institutional capital for the first time.
Of the 2,677 funds currently in the
market, 12% have been on the road
for 1-6 months, whereas 6% have
already been on the road for over 3
years. The length of time can be
augmented by a well-crafted premarketing effort and a strategic
approach to fundraising in what is
currently the most congested private
equity market to date.
231
107
76
NORTH AMERICA
EUROPE
ASIA & ROW
GLOBAL DRY POWDER CONTINUES TO STACK UP
As of June 2016, global dry powder stands at an alarming $1.4 trillion
42%
1 Year or Less
33%
1-2 Years
25%
2-3 Years / +
These figures represent a bifurcated
market that is showing few signs of
equalizing in the near-term. When
considering first-time managers
alone, the figures become increasingly polarize; 35% of all first-time
fund managers close in one year or
less, whereas 35% take over two
years to close.
Source: Preqin Fundraising Momentum
Dry powder continues to scale across all asset classes YOY from 2015, representing a near 50% increase from
levels seen pre-global financial crisis. Geographically, North America accounts for over 50% of this total with
$828.4 billion of dry powder as of June, 2016. This is over $100 billion increase from 2015, or 5x the $23 billion
increase seen in both Europe and Asia.
Within the $93.6 billion of distressed debt dry powder, special situations funds are the only category sitting on
less capital than in 2015.
Within the $163 billion of venture capital dry powder, venture debt funds are the only category sitting on less
capital than in 2015, with a decrease of $100 million.
Source: Preqin; Funds Dry Powder
Continued from page 2
PRIVATE DEBT QUADRUPLES
SINCE 2005
FUNDRAISING VOLUME
At the end of Q2 2016, Over 2500 Funds in the Market Raising Capital
Private debt’s dry powder has grown from
$42.8bn in 2005 to $194.3bn, representing the
largest quantum of capital ever reported. More
specifically, distressed debt funds globally hold a
record $63.7bn of dry powder, representing an
increase over 10% since the end of 2015.
There are currently 2,683 funds in the market competing for funding. Of
these, over 800 are venture funds compared to c. 600 buyout and growth
funds. However, the majority of these funds are micro-VC funds targeting
less than $100m fund sizes.
Distressed private equity funds are, on average, targeting the largest fund
size at c. $800m, compared to venture funds targeting funds 1/8 the size.
Source: Preqin Private Debt Portal; Dry Powder
SPOTLIGHT ON
EMERGING MARKETS
40%
22%
70%
Percentage of LPs that anticipate increasing new commitments to EM PE Funds over the
next 2 years, compared to 45%
last year
Source: Preqin Funds Currently Raising
FUNDS CLOSED IN 2016 RAISING AT PACE
There are more PPMs in the market than
ever before. The number of funds in the
market represents a near 100% increase
since 2008. Over the same period, GPs on
The proportion of LPs who plan
to decrease commitments to
EM in 2016, compared to 16% in
2015
the road are targeting more than a 20%
The percentage of LPs who believe that their EM portfolios
met or exceeded expectations
in 2015
years ago.
In 2016, investors have less confidence in emerging
markets than in 2015. Over the next 12 months, LPs
rate Southeast Asia as the most attractive EM investment geography, followed by India and Sub-Saharan
Africa.
LPs believe that multiple expansion and operational
improvement are more important factors driving returns in emerging markets as compared to developed
markets, and team experience is the most important
metric used to select managers, rated more highly
than track record.
Source: EMPEA 3016 Global Limited Partners Survey
increase in total capital; 2500 managers are
collectively targeting $889 billion, compared to 1304 GPs targeting $705 billion 8
Funds closed in 2016 raising at pace, taking a mere 14 months. This,
compared to 17-18 months over the past 4 years. Furthermore, the funds
closed YTD in 2016 have reached 111% of the target fund size, tying 2006
for the highest percentage ever recorded.
As the market becomes increasingly bifurcated, the winners are closing
oversubscribed funds faster than ever before. By the close of Q3, we expect the average number of months to final close to increase as funds
that have been on the road for some time begin to close on capital.
Source: Preqin Recently Closed Funds
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