Dry powder in secondaries on the rise

The amount of dry powder in the secondaries market reached a record high in 2015 as the fundraising market remained strong, according to Evercore Private Capital Advisory’s 2015 Secondary Market Survey.

Evercore estimates that the level of available dry powder in the hands of secondaries buyers reached $65 billion as of 31 December, up from $56 billion as of 30 June. In addition, the firm believes buyers are planning to raise another $40 billion in 2016.

The bulk of the increase was among private equity secondaries funds, which represented 81 percent of total dry powder at the end of 2015, up from 76 percent at the end of the first half of 2015.

Meanwhile, the shares of real estate and infrastructure secondaries dry powder went down. Infrastructure secondaries dry powder represented 8 percent of the total as of 31 December, down from 11 percent at the end of June. Real estate secondaries dry powder represented 11 percent of the total as of 31 December, down from 13 percent at the end of June.

Dry powder is also concentrated within the industry as the top 20 players manage more than 80 percent of it, according to Evercore.

The increase in dry powder is mainly due to a boost in fundraising at secondaries firms.

“Fundraising has been extremely strong over the last few years and other players have raised capital to participate in the secondaries market,” Nigel Dawn, global head of private capital advisory, told Secondaries Investor, mentioning funds of funds and insurance companies. “There’s generally more competition.”