Record dry powder to expire in 2013, says Triago

Greg Gille
@unquotenews
04 April 2013

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Despite an expected increase in capital calls this year as GPs put more money to work, nearly $15bn worth of LBO commitments could be left unused and returned to investors in 2013, according to placement agent Triago.

Based on its own research, Triago believes that $145bn in unused leveraged buyout commitments worldwide are set to expire this year. Around 10% of this amount – twice the historic annual rate according to Triago – is likely to be returned to LPs before it can be invested, if dealflow continues at its current pace.

The placement agent is, however, expecting both investments and divestments to increase in the coming months: distributions to LPs should rise to around 12% of committed capital compared to 10% last year, while capital calls should increase by an even greater margin to settle at 13% of committed capital.

Despite cash calls outweighing distributions again after a brief respite in 2012 (when these figures stood at 9% and 10% of committed capital respectively), Triago anticipates global fundraising to increase by nearly a fifth to $318bn in 2013. In addition to the aforementioned unspent capital being returned to LPs, the placement agent also expects larger average allocations to private equity from large US pension funds to provide some much-needed extra liquidity this year.