Global private equity and real assets funds have a total $909 billion in commitments yet to be called for investment, according to a report from Cambridge Associates.
The amount of unspent committed capital, or dry powder, as of Dec. 31 was 23% higher, or $168 billion more, than the predicted amount based on call patterns calculated from more than 3,400 funds spanning vintage years 1990-2013.
Private equity and real assets funds raised $1.9 trillion between 2008 and 2013, 45% of which had been called as of Dec. 31. Private equity accounted for $722 billion of the unspent committed capital and real assets, $187 billion.
U.S. private equity, European private equity and global real estate were the largest contributors to the buildup, with $655 billion total in unspent committed capital. However, they were still 27% below the 2009 peak of $893 billion.
“The peak overhang from six years ago is steadily dropping as investment periods for those vintage years reach their expiration date, but this is happening at slower than a historical rate,” said Andrea Auerbach, managing director and global head of private investment research at Cambridge and co-author of the report, in a news release.
Funds with more than $5 billion in assets accounted for only $240 billion, or 26%, of total dry powder.
“Current market conditions are frothy, with record-breaking distributions to LPs underpinning rising commitments, cresting acquisition multiples, easily available credit and robust capital markets,” Ms. Auerbach said. “The global overhang is below its peak but could easily surge again.”