Key Takeaways
Despite the challenges caused by COVID-19, private equity had another record-breaking year in 2020.
01 Another trillion-dollar year for private capital dry powder
Deal volumes in 2020 remained consistent with 2019 levels.
02 A new normal is on the horizon
Many general partners (GPs) plan to adopt a hybrid work model and resume at least some travel going forward.
03 Time to fundraise remained steady
Despite the shift from in-person to virtual fundraising, GPs were able to raise capital on the same timeline as they did in 2019.
US PE investment and market returns by sector
PE firms are continuing to accelerate their investments, as they have the dry powder to take advantage of attractive deals. During the 2002 and 2009 economic downturns, PE firms averaged internal rates of return (IRR) between 17% and 21%, a healthy premium to the 16% long-term PE average, according to Bain Capital’s 2021 Private Equity Report.
Return to travel and frequency
Many respondents are still determining new office policies, including when they will return to travel. For some, it has been business as usual since the worst of the COVID-19 pandemic passed.
Time between funds raised and future timing
Surprisingly, GPs took about the same time to raise a fund in 2020 as they did in 2019, despite lockdowns and travel restrictions. From Q3 onward, time to raise reduced rapidly. GPs expect this trend to continue, with the planned time between raises lower than it has been for the last five years. However, this shift may also be due to the overall increase in the time to close a fund.
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