Private equity fundraising expected to drop in 2017

Private equity worldwide fundraising is expected to be down significantly, while deal flow is likely to remain flat in 2017, according to a report released Thursday by PitchBook.

Private equity transaction volume was also down in 2016 with a total of $1.1 trillion invested in 6,696 deals as of Dec. 13, compared to a combined $1.3 trillion in 8,199 transactions in 2015, Pitchbook’s Global 2017 Crystal Ball Report noted.

Meanwhile, fewer private equity firms surveyed expect to raise a new fund next year. Some 41% of survey respondents indicated they plan to raise a new fund in 2017, down from 87% that indicated they planned to raise a new fund in last year’s survey.

Fifty-three percent of survey respondents said they are not planning to raise a new fund because they are still investing from a current fund. Currently, private equity firms worldwide have a combined $852 billion in dry powder.

Separately, net cash flow to limited partners — the difference between distributions of profits and contributions of capital to funds — is expected to continue to decrease in 2017.

Pitchbook conducted the survey of about 100 private equity professionals in November and December.