PE Returns Record Amount of Cash in 2013


January 9, 2014

This issue of DealMarket Digest is full of news about a record-breaking year for the PE industry. Not only exits, LBO dealmaking and fundraising are up, so are cash returns to limited partners.  The WSJ is reporting that private equity firms were expected to return more than USD 120bn to their limited partners in 2013, topping the previous year’s record of USD 115bn, according to estimates by Cambridge Associates, which advises investors on allocations to the asset class.


Buyout groups returned USD 60.8bn to investors in the first half of this year, according to the report which cited Cambridge Associates research. Strong capital markets were the enabling force, particularly returns generated via initial public offerings of portfolio companies.


Debt refinancing was enabled by low interest rates last year. The result was that PE -backed companies sold USD 66.2bn worth of bonds and loans in 2013 to deliver cash back to shareholders, eclipsing the record USD 64.2bn of 2012, according to data provider S&P Capital IQ LCD in the WSJ report. The article concludes that this kind of activity will continue in 2014 as private equity funds still have many assets they need to exit from.

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