Private Equities’ Capital Deployment Might Take Time
Alternatives Have Record Dry Powder, Fewer Opportunities in 2016
Valuation advantage
Alternatives with record dry powder (uninvested commitments) are in the best position to take advantage of attractive valuations across global equities. Equities around the globe have fallen steeply in 2015 and year-to-date in 2016. Before recovering from their lows, select sectors such as metals, mining, and oil fell 60%–80% on falling commodities, leveraged balance sheets, and lower levels of manufacturing.
Blackstone (BX) deployed $6.7 billion in new capital during 1Q16. That was higher than the previous two quarters. This was achieved by leveraging Blackstone’s diverse platform to find opportunities globally.
Public markets preferred
KKR & Co. (KKR) saw its distributable earnings decline on lower bookings. The company made realized performance income of $99 million compared to $308 million in 1Q15. KKR’s realized investment income also declined sharply to $35 million in 1Q16 compared to $231 million in 1Q15.
KKR’s total AUM (assets under management) stood at $126 billion in 1Q16. Let’s compare that to AUM for KKR’s peers:
Carlyle Group (CG): $193 billion
Blackstone Group (BX): $333 billion
BlackRock (BLK): $4.5 trillion
Apollo Global Management (APO): $163 billion
Together, these companies form 4.1% of the PowerShares Global Listed Private Equity ETF (PSP).
Carlyle had total dry powder of $56.6 billion, forming 32% of the total assets under management as of March 31, 2015. This reflected the solid funding power of the company. It included $23.1 billion in corporate private equity, $4.7 billion in global market strategies, $15.4 billion in real assets, and $13.3 billion in investment solutions.
Now let’s look at Blackstone and why it remains the leader in real estate investment and performance.
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