Q1-2019 Private Equity Industry Update
2018 proved to be one of the most active years in private equity history with near record numbers in deal volume and capital investment. 2019 however, has shown decreasing trends with a below average Q1 for both deal volume and capital invested. Total fundraising for Q1 is also off to a slow start with just $91 million raised and 107 funds closed. In contrast, growth equity funds are experiencing their strongest fundraising Q1 since 2008. Adding to this, the 10 largest funds in the market are seeking large capital raises with about $126 billion between them. This indicates that deal activity might be poised to pick up despite a slow quarter.
Analysts believe that some possible explanations for the slow start to the year include uncertainty regarding global trade disputes, the U.S. government shut down, and volatility in the equities market. Q1 2019 capital investment is down 34% from Q1 2018, and down 38% in deal volume. Nonetheless, future outlook remains bullish as Q1 investments were significantly low just following a massive fundraising year. As a result, Provident estimates that a substantial amount of dry powder still remains to be deployed, which may drive M&A activity and consolidation in the coming quarters.
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