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INVESTING/PORTFOLIO STRATEGIES

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.