Private equity returns are down 27.6% year-over-year for the 12-month period ending July 30, 2009, according to a Preqin report received by BloggingStocks. The London-based research house notes, however, that the global private equity industry's dry powder (i.e., uncommitted assets) continues to exceed $1 trillion, suggesting that there is still plenty of capital waiting for a rainy day.
Returns for the past 12 months reflect all the nastiness we've seen and lived -- bailouts, company collapses, equity and credit market mayhem and unemployment rates dangerously close to double-digits. But, the money is still coming in. Preqin puts the rate by which contributions outpaced distributions at 235% for buyout funds in 2008. This category raised $148 billion while distributing only $63 billion, making last year the most imbalanced for these two measures in history.
And, cash on the sidelines continues to mount.
In total, private equity funds are sitting on approximately $1.08 trillion in dry powder and are waiting for conditions to improve before putting it to work. The United States led the world with $608.9 billion in uncommitted capital, with Europe at $286.3 billion and the rest of the world at $183.4 billion. The buyout sector remains the largest with $507.1 billion in dry powder waiting for acquisition targets to be identified. Real estate funds are sitting on $194.1 billion in dry powder, and venture funds have $153 billion waiting to be put into action.
Once conditions stabilize sufficiently for private equity fund managers to put this money to work, a tsunami of capital could be unleashed on the marketplace. Especially with all that venture money waiting to be deployed, put your business plan together now -- you might actually have a shot at getting funded!
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