Private equity is on track for the largest investment volume since before the recession despite a seasonal decline in the third quarter, according to the Private Equity Growth Capital Council’s latest quarterly trends report.
Quarterly U.S. private equity investment deal volume decreased by 10%, from $136 billion in the second quarter to $123 billion in the third quarter, the report said. First quarter deal volume was $140 billion.
Third-quarter fundraising also fell, with volume decreasing to $31 billion raised by about 25 funds from $53 billion raised by some 46 funds in the previous quarter.
“We saw a seasonal dip in the third quarter, but we are tracking toward 2014 having the most private equity investment volume in seven years,” Bronwyn Bailey, PEGCC’s vice president of research, said in a statement.
“Exit volumes also indicate that this will be a strong year for private equity investors.”
Exit volume of $50 billion remained at second-quarter levels, outpacing seven of the last nine third quarters since 2005, the report said. At that pace, the industry is likely to set a record this year. Exit volume in the first quarter of the year was $67 billion.
According to the report, the proportion of equity financing for U.S. leveraged buyouts increased to 44% in the third quarter from 37% in the previous quarter.
Global buyout funds’ callable capital reserves —“dry powder” — grew from $440 billion in July to $465 billion as of the end of October, a 6% increase. The reserves stood at $391 billion in December, and the current level is just short of the $483 billion recorded in December 2008.
A recent report by Commonfund and NACUBO found that college and university endowments are increasing their allocations to alternative investments, including private equity.
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