High valuations, crowded markets and uncertainty around COVID-19 have converged to push the level of uncalled capital commitments in private markets to a new absolute record in 2021.
 

This paper examines some of the issues associated with this question and finds:
 

  • Capital commitments in private markets have reached new levels, but on a relative basis, the dry powder level may not be as high as it appears.
  • Although valuations are also high, GPs have invested more selectively and deal flow was substantially reduced in 2020.
  • GPs are employing processes to manage the potential drag on their returns by using subscription lines and credit facilities.
  • Private market fund managers may be well positioned to help their portfolio companies adapt to the fundamental industrial transformations resulting from the pandemic, potentially leading to attractive investment opportunities.

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