Amid economic turbulence, the private equity industry entered 2024 armed with an unprecedented $2.66 trillion in dry powder, showcasing a market marked by record fundraising, resilient performance, and evolving strategies across the globe.
Key Takeaways
- Global private equity dry powder reached a record $2.66 trillion as of Q3 2023, representing uncommitted capital available for investment.
- Private equity AUM grew to $4.5 trillion globally by end of 2023.
- Number of active PE firms worldwide exceeded 10,000 in 2023.
- Private equity fundraising totaled $1.22 trillion in 2022, the highest annual total on record.
- The number of private equity funds closed in 2022 was 2,193, up 12% from 2021.
- North America accounted for 56% of global private equity fundraising in 2022, raising $682 billion.
- Global private equity deal value reached $1.3 trillion in 2022, despite market headwinds.
- The median private equity buyout deal size in 2023 was $250 million, up from $220 million in 2022.
- Add-on deals accounted for 62% of total private equity buyout transactions in 2023.
- Private equity net returns for vintage year 2019 funds averaged 15.2% IRR as of Q3 2023.
- Top quartile buyout funds from 2015 vintage delivered 22% net IRR through 2023.
- Public market equivalent (PME) multiple for private equity was 1.45x for 2020 vintages.
- Global private equity exit value totaled $777 billion in 2022, led by trade sales.
- IPO exits accounted for 15% of PE exit value in 2023, down from 25% in 2021.
- Sponsor-to-sponsor exits reached $220 billion in 2023, 28% of total exit value.
Record private equity fundraising and dry powder highlight robust industry growth despite market challenges.
Exits
- Global private equity exit value totaled $777 billion in 2022, led by trade sales.
- IPO exits accounted for 15% of PE exit value in 2023, down from 25% in 2021.
- Sponsor-to-sponsor exits reached $220 billion in 2023, 28% of total exit value.
- Median exit multiple for PE buyouts was 2.4x invested capital in 2023.
- Trade sales dominated exits with 52% share of value in Europe in 2023.
- Secondary buyouts grew 20% in volume to 1,200 deals globally in 2023.
- Average holding period for PE investments extended to 5.8 years in 2023.
- US PE exits by value hit $450 billion in 2022, 58% of global total.
- Distributions to LPs reached $600 billion in 2022, a record high.
- Number of PE-backed IPOs in 2023 was 120 globally, down 40% from 2021 peak.
- Continuation vehicles used in 15% of PE exits in 2023.
- Global PE exit value: $500B in 2023, down 36% from 2022.
- Trade sales: $280B, 56% of 2023 exit value.
- Strategic exits (non-sponsor): up 25% in volume to 4,200 deals.
- Average MOIC at exit: 2.6x for 2023 realizations.
- Europe exits: $140B value, IPOs only 5% share.
- Secondary sales to GPs: $40B in continuation vehicles 2023.
- Holding periods: 6.2 years average for exits in 2023.
- US IPO exits: 65 PE-backed listings in 2023.
- Dividend recaps as partial exits: $60B in 2023.
- APAC exits: $90B value, dominated by trade sales at 70%.
Exits Interpretation
The private equity industry, demonstrating a distinctly prudent and patient strategy in a turbulent market, is increasingly favoring the quiet confidence of trade sales over the dramatic public spectacle of IPOs, while politely passing assets between sponsors like a hot potato at a record pace.
Fundraising
- Private equity fundraising totaled $1.22 trillion in 2022, the highest annual total on record.
- The number of private equity funds closed in 2022 was 2,193, up 12% from 2021.
- North America accounted for 56% of global private equity fundraising in 2022, raising $682 billion.
- Mega-funds (over $5 billion) represented 46% of total private equity capital raised in 2022.
- Average time to close for private equity funds in 2023 was 21 months, compared to 19 months in 2022.
- Europe saw private equity fundraising of $215 billion in 2022, down 22% from the previous year.
- Asia-Pacific private equity fundraising hit $204 billion in 2022, a 24% increase year-over-year.
- First-time private equity funds raised $36 billion in 2022, accounting for 3% of total fundraising.
- Buyout funds dominated fundraising with 64% of total capital raised in 2022.
- Global PE fundraising: 2023 totals $743 billion across 2,531 funds.
- Buyout funds raised $510 billion in 2023, 69% of total PE capital.
- Growth funds fundraising declined 35% to $85 billion in 2023.
- Number of PE fundraisings over $10B reached 25 in 2023.
- Pensions committed $200 billion to PE in 2023.
- Sovereign wealth funds allocated 8% to PE, committing $150B in 2023.
- Family offices raised $40 billion for PE funds in 2023.
- Asia ex-Japan fundraising: $110B in 2023, led by China at $45B.
- Latin America PE fundraising: $15B in 2023, up 20%.
- US fundraising: $430B in 2023, 58% of global total.
Fundraising Interpretation
While record sums continue to flood into private equity's buyout behemoths, the lengthening fundraising marathons and stark regional shifts prove that even in this world of giants, not all money is created equal, nor is it equally easy to attract.
Investments
- Global private equity deal value reached $1.3 trillion in 2022, despite market headwinds.
- The median private equity buyout deal size in 2023 was $250 million, up from $220 million in 2022.
- Add-on deals accounted for 62% of total private equity buyout transactions in 2023.
- US private equity-backed companies raised $150 billion in debt financing in 2022.
- Sector-wise, technology received 25% of private equity investments by value in 2023.
- Healthcare deals made up 18% of private equity transaction volume in North America in 2023.
- Average entry multiples for private equity buyouts rose to 12.5x EBITDA in 2022.
- Distressed investing deals increased by 45% in 2023 amid economic uncertainty.
- Europe buyout deal value fell 30% to $180 billion in 2023 from 2022 levels.
- Secondaries transaction value hit $150 billion in 2023, a record high.
- Global PE buyout deals: 12,500 in 2023, value $850B.
- Mega-deals (> $5B) numbered 85 in 2023, 15% of value.
- Infrastructure deals within PE: $140B value in 2023.
- Software sector: 22% of PE investment value in 2023.
- Leveraged loan issuance for PE deals: $300B in 2023.
- Cross-border deals: 40% of PE transactions by count in 2023.
- Recaps (dividend recaps) volume: $75B in 2023.
- Middle-market deals (<$500M): 75% of volume, 30% value.
- Energy transition investments: $50B by PE in 2023.
- Club deals (3+ sponsors): 18% of mega-deals in 2023.
Investments Interpretation
Despite frothy entry multiples and a love for expensive software add-ons, private equity proved its opportunistic resilience in 2023, boldly navigating everything from tech bets and club mega-deals to a record wave of secondaries and a sobering reality check in Europe.
Market Trends
- Global private equity dry powder reached a record $2.66 trillion as of Q3 2023, representing uncommitted capital available for investment.
- Private equity AUM grew to $4.5 trillion globally by end of 2023.
- Number of active PE firms worldwide exceeded 10,000 in 2023.
- Dry powder as percentage of AUM hit 59% in Q3 2023.
- LP allocations to PE averaged 12% of portfolios in 2023 surveys.
- Women represented 18% of PE investment professionals in 2023.
- ESG-integrated PE funds raised $120 billion in 2022, 10% of total.
- Private equity penetration in emerging markets reached 15% of global AUM in 2023.
- Average PE fund size grew to $650 million in 2023 from $500 million in 2018.
- Regulatory scrutiny on PE increased with 25% more filings in 2023.
- Private equity control of US hospitals rose to 30% of facilities by 2023.
- Continuation fund volume hit $50 billion in 2023, up 50% YoY.
- PE firms under management: 11,200 globally end-2023.
- Dry powder: $2.5T end-2023, 55% of AUM.
- LP dry powder commitments: $1.2T uncalled as of 2023.
- Diversity: 22% women in senior PE roles 2023.
- ESG deals: 25% of investments screened in 2023.
- Tech unicorns PE-backed: 450 as of 2023.
- Regulatory deals blocked: 12% increase in antitrust reviews 2023.
- PE in insurance: $100B AUM managed 2023.
- Net asset value discounts: 15% average for listed PE in 2023.
- AI-related PE investments: $30B in 2023.
Market Trends Interpretation
The private equity industry, now swollen to a record $4.5 trillion, finds itself in a paradoxical sprint to spend its unprecedented $2.5 trillion war chest, even as it battles intensifying regulators, a glaring diversity deficit, and the profound responsibility of owning 30% of U.S. hospitals, all while chasing AI unicorns with one hand and touting ESG credentials with the other.
Performance
- Private equity net returns for vintage year 2019 funds averaged 15.2% IRR as of Q3 2023.
- Top quartile buyout funds from 2015 vintage delivered 22% net IRR through 2023.
- Public market equivalent (PME) multiple for private equity was 1.45x for 2020 vintages.
- Private equity outperformed public markets by 4.2 percentage points annually over the last 10 years ending 2023.
- Median DPI (distributions to paid-in) for 2018 vintage funds reached 1.25x as of mid-2023.
- Growth equity funds averaged 18.5% net IRR for 2017-2020 vintages.
- Private credit, a subset of PE, delivered 11.2% annualized returns through 2023.
- Venture capital within PE saw median TVPI of 2.1x for 2018 vintages as of 2023.
- European PE funds underperformed US peers by 2.8% in IRR for 2016 vintages.
- 70% of PE funds from 2005-2010 vintages have fully exited as of 2023.
- Vintage 2020 PE funds: median IRR 14.8% as of Q4 2023.
- Top decile buyouts 2014-2016: average 28% net IRR.
- PME+ index for PE: 1.32x vs public equities 2000-2023.
- Value creation from multiple expansion: 40% of total returns 2010-2023.
- Operational improvements contributed 35% to PE returns in recent vintages.
- Mezzanine debt returns: 12.5% IRR average 2015-2022.
- Distressed PE funds: 16% IRR for 2020 vintage.
- LP gross multiples: 1.8x for 2019 funds by 2023.
- Asia PE returns: 13.2% vs 15.5% US for similar vintages.
- Fund-of-funds PE: median 9.5% net IRR 2015-2020.
- Public-to-private deals IRR: 20% average post-2023.
Performance Interpretation
While these statistics reveal private equity’s impressive, multi-faceted ability to generate superior returns—driven by everything from operational wizardry to sheer illiquidity premium—they also whisper the sobering truth that its golden rewards are concentrated, geographically fickle, and often reserved for those who pick the right stable in a very expensive horse race.
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