Overall, private equity (PE) has performed strongly throughout 2013, continuing its resurgence following the global financial crisis albeit not reaching the levels the market was in 2007. At the same time, not everything has been 100% rosy, and there are still many challenges that PE professionals, investors, and those offering deals will need to face in 2013.
Although the amount of cash “dry powder” has increased in 2013, this is offset by almost $300billion being raised across the industry over the last 12 months. While large sums of money have gone uninvested in 2013, this is for no reason other than investors and PE funds are waiting to find the best deals available.
Rather than this near record fundraising year indicating then funds are becoming less fussy with regards to where they invest, it shows that the generally positive year enjoyed by all financial markets will likely lead to more high quality investment opportunities in 2014. Blue chip PE funds, like CVC, are proving there is still demand for investment opportunities, particularly when the big names are involved.
Strong Exit Numbers
While funds raised are one important measure of the state of the PE market, it is what happens at the end of an investment period that delivers the ultimate result. Efinancialnews.com reports that total buyouts increased to over $85billion in 2013, driven in part by a huge year on year increase in IPO exits, from 3 to 23.
The major downside for PE in 2013 and the biggest challenges for the year ahead are unquestionably due to the regulation surrounding the industry. European politicians have said they may look to relax regulations around PE funds and deals in order to boost the markets as well as the continent-wide economy in 2014, while in the United States, for so long the centre of the world when it comes to PE, there is much legal and political wrangling surrounding their regulations.
2013 in Private Equity
2013 was a strong year for private equity and all signs point to 2014 being another success, although industry regulation and “dry powder” are likely to remain the hottest downside topics against a backdrop of positive dealmaking and high quality investment opportunities.