A recent report by Bain & Co. found that private equity general partners held about $2 trillion in undeployed cash at the end of 2018. Much of that dry powder has been driven by accelerated fundraising on the part of GPs that have collectively raised $8.4 trillion since 2003, while high valuations have also contributed to a riskier environment with fewer attractive opportunities.
On the back end, however, the ratio of contributions to distributions has declined, implying that more money is being paid out to LPs than is coming in, despite such high fundraising. Additional data in the report show that more than 50% of the institutional investors surveyed were under their target private equity allocations. These under-allocations have not been due to lack of interest. Rather, the competition between LPs to reinvest money back into the market has been so high that the process of redeploying capital has been significantly slowed by lower supply.