Private equity investment volume reached its second highest level since 2007 last year, while equity financing’s contribution to capital reserve bases increased, according to the American Investment Council’s (AIC) 2016-Q4 Private Equity Trends Report.
“The latest numbers show a sustained growth of the industry throughout 2016,” AIC President and CEO Mike Sommers said. “When compared to the past decade it is clear private equity’s business and investment partners performed exceedingly well last year, in turn fostering economic growth for the country.”
Among the key findings, equity financing’s contribution to capital reserve bases climbed slightly last year, reaching 43 percent.
Annual U.S. private equity investment volume experienced a drop to $653 billion in 2016 from from $739 billion in 2015. U.S. private equity exit volume fell to $321 billion in 2016 from $416 billion in 2015 – a 23 percent drop.
Global buyout funds’ callable capital reserves, or “dry powder,” rose to $526 billion in January 2017 from $473 billion in December 2015 – a jump of 11 percent.
Private equity fundraising volume also fell to $187 billion in 2016 from $203 billion the previous year.
“The 11 percent increase in dry powder from the Q4 Trends Report is a sign that the industry is poised for more acquisitions in 2017,” Bronwyn Bailey, AIC vice president of research and investor relations, said
While fundraising has dropped by eight percent since last year, it is still higher than it was a few years ago, Bailey said.