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Deloitte on record private equity ‘dry powder’ and expectation of M&A activity

22 August 2014

Commenting on private equity ‘dry powder’, and the expectation of M&A activity in the months ahead, Richard Parsons, head of private equity coverage at Deloitte said:

"As of July this year, there was a record US $1.16tn available for investment sitting in private equity funds, according to the Preqin Quarterly Update. From the final quarter of 2008, until early 2013, the private equity fundraising market was tough, which had proved a major distraction for houses looking to raise new funds.

“Now most of the larger funds have successfully raised new funds they are actively looking at ways to deploy their capital into growth opportunities. However, it remains a sellers’ market which is driving pricing upwards and creates challenges for firms looking to deploying capital into new deals. As a result, private equity houses are likely to consider different geographies, sectors and investment strategies as an alternative if they wish to avoid buying and selling from each other.

“Investors in private equity firms, which include pension and sovereign wealth funds, now have a greater risk appetite and are looking for returns in an environment with relatively low interest rates. They see the private equity market as being able to provide this.

"So far, we haven't seen any huge leveraged buyouts, with the debt markets not strong enough to support a multi-billion cheque. However, the ongoing recovery in the debt market coupled with the wall of ‘dry powder,’ controlled by private equity, means we could start to see some significant M&A deals in the coming months."

End

Notes to editors

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.

"The ongoing recovery in the debt market coupled with the wall of ‘dry powder,’ controlled by private equity, means we could start to see some significant M&A deals in the coming months" - Richard Parsons, Head of Private Equity Coverage

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