Around a third of the $679bn (£493.5bn) raised by private equity funds at the end of the boom run in 2008 is still sitting at their disposal, putting a huge amount of pressure on fund managers to invest to avoid exercising extension clauses and to provide timely returns on capital.
“In comparison to the pre-crisis boom period, recent years have been characterised by private equity fund managers delaying their investments for longer than before. Due to the wider economic conditions and constriction of the deal market, managers are understandably showing more caution in deploying capital,” says Preqin’s Alex Jones.
A record $679bn was raised by the 1,308 funds that closed in 2008. But around a third of this will need to be invested in the next year to meet fund lifecycle limits.
With so much capital left to deploy from this vintage, pricing is likely to remain high as a pile of money will be chasing a limited supply of high-quality assets.
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