Global private equity dry powder continues fall from 2023 peak

Global private equity dry powder continues to decline from its recent all-time high, even as private equity fund managers remain under pressure to put investors' capital commitments to work.

Global private equity funds collectively held nearly $2.515 trillion in dry powder as of June 30, down 7.7% from a record $2.725 trillion in 2023, according to data from S&P Global Market Intelligence. Dry powder is capital pledged by investors to private equity funds but has not yet been deployed into leveraged buyouts or other deals.

For the general partners managing private equity funds, the issue is not the amount of dry powder — with the global total still higher than at any point prior to 2022, there is ample capital for deals — but how old the dry powder is getting, said Jeremy Swan, who leads CohnReznick LLP's financial sponsors and financial services practice. Swan pointed to a 2024 analysis conducted by consultancy Bain & Co. that showed 24% of global buyout fund dry powder was raised four or more years ago.

"That says there's less capital being deployed, which means less capital being returned to investors, which puts a lot of pressure on the fundraising environment," Swan said.

Hurdles to dealmaking

Aging dry powder is a symptom of private equity's faltering investment cycle, alongside declining fundraising and the slow pace of exits.

There was real optimism at the end of 2024 for improved dealmaking, an outlook based on a growing US economy and the expectation that the incoming Trump administration would usher in a more business-friendly climate with fewer regulatory hurdles to M&A, Swan said. Then, expectations met reality.

"Pick your poison: tariffs, economic growth forecasts, geopolitical issues," Swan said. He said ongoing pressure from inflation, which has limited expectations for interest-rate cuts in 2025, has kept the cost of debt higher — another headwind to private equity deals.

Eric Jones, a partner at Honigman LLP and member of the firm's private equity group, described "a huge downturn in deal activity" coinciding with President Donald Trump's "Liberation Day" announcement of sweeping tariffs in early April.

"It creates massive uncertainty. It's hard to transact around uncertainty and diverging valuation expectations between buyer and seller," Jones said.

Jones, who primarily advises middle- and lower-middle-market private equity funds, said the combination of near-record dry powder and the slower pace of M&A was bringing mega-buyout funds "down-market" in search of attractive investment opportunities, increasing the competition in the middle market.

– Download a file of raw data featured in this story. – Catch up on private equity secondaries fundraising trends. – Read about lengthening buyout fund holding periods.

Concentration of capital

As of July 1, the top 25 global private equity investors with the largest reported dry powder reserves collectively held $210.71 billion in uncommitted capital, or close to 8.4% of global private equity dry powder, according to Market Intelligence data.

CVC Capital Partners PLC held the largest stockpile of dry powder at midyear, with $41.4 billion in uncommitted capital as of its most recent reporting period.

Clustered with CVC at the top of the dry powder rankings were Sweden-based private equity fund manager EQT AB (publ) and private equity's Big Four — the four largest, publicly listed private equity firms by assets under management: Apollo Global Management Inc., Blackstone Inc., The Carlyle Group Inc. and KKR & Co. Inc. Big Four executives, including KKR co-CEO Scott Nuttall and Blackstone CEO Stephen Schwarzman, have on recent earnings calls said they plan to lean into the macroeconomic uncertainty, tapping into their huge dry powder reserves to make deals when other investors are reluctant to act.

"Some best times to deploy capital are in a risk-off world, when sentiment is most negative," Schwarzman said on Blackstone's first-quarter earnings call.

Growing impatience

CohnReznick's Swan said he heard concerns about the pace of deals in recent conversations with institutional investors, who are the main source of private equity's dry powder.

"They're putting the calls into the GPs [general partners] and the funds they're invested in and saying, 'OK, what should we expect to see? What's the pipeline look like?'" he said.

Honigman's Jones said it was increasingly looking like the pace of dry powder deployment would remain slow through the end of the year.

"I don't see [dealmaking] opening up how people thought it might open up in the second half. I'm looking more into like 2026 for that to happen at this point," Jones said.