Private equity capital calls shrink to lowest level on record

Private equity fund distributions have outweighed capital calls by a significant and striking degree over the past five years.

Data from eFront, the world’s leading alternative investment management software and solutions provider, shows that since the start of 2013, distributions from private equity funds have remained at historically high levels, while capital calls have fallen steadily to their lowest level on record, when measured as a proportion of committed capital.

• Global private equity distributions have exceeded capital calls significantly for the past five years.
• Positive net distributions even accelerated in 2017, possibly leading to significant funds commitments in 2018.
• The current phase is exceptional in its duration and the size of the gap.
• Strikingly, the pace of capital deployment – measured as a proportion of committed capital – is slower than during the worst of the 2007-09 crisis.
• This slow deployment is evidence of investment discipline by fund managers, and a signifier of a build-up of dry powder.
• This could translate into a further extension of investment periods for active funds.
• Since 2014 capital calls have remain below the lowest point of 2009 and are minimal since 2015.