The current dry powder of the private equity industry has reached US$1,067 billion globally as of 17 December 2013, slightly exceeding the previous record high before the global financial crisis in 2008, according to data released by private equity research firm Preqin.
Dry power is an industry phrase describing those capital committed to private equity funds but not yet invested.
Compared to 2012, this year’s total dry powder showed a 14% jump.
Over 9% of current dry powder is attributed to funds raised before 2008, meaning it may expire if investors do not grant investment period extensions.
In terms of investment strategy, capital available for investment in purely buyout opportunities stands at US$397 billion, notably lower than the US$483bn high in December 2008.
But dry powder in distressed situations and growth capital has increased significantly. For distressed situations, dry power went from US$56 billion to US$74 billion between 2008 and 2013.
Growth capital has seen its dry powder increase from US$46 billion to US$76 billion during the same time period.
The reason behind the increase in dry powder is that private equity investment deal volume has stayed relatively flat for three consecutive years despite notable growth in fundraising and an increase of exits.