Private Equity's $2.3 Trillion Dry Powder, IPOs, and predictions for 2024.

Private Equity IPOs & What’s in store for PE Firms in 2024.

Where does PE currently stand?

Tech-focused private equity funds have undergone notable shifts in performance over the past decade. After intermittent dips pre-2014, a decisive turn in 2014 led to an eight-quarter outperformance, followed by a brief lag and a remarkable 19-quarter upswing from Q1 2017, driven by the peak of the COVID-19 pandemic. However, the most recent six quarters have seen a reversal due to market corrections, rising interest rates, and recession risks. Despite this, the tech and software sectors exhibit robust fundamentals, with valuations now more reasonable. The outlook for 2024 appears promising, with a stabilized valuation landscape, expected pauses in interest rate hikes, and potential valuation expansion in the software sector, aligning with historical patterns.

PE dry powder hit a record $2.3 trillion this year as dealmaking was harder to execute and firms had to look for different ways to deploy investors’ capital. The top holders of this dry powder were Titans Apollo and KKR. Macroeconomic conditions can be put to blame for this so if conditions get better we could see more deal activity in 2024. Sectors like healthcare and SaaS will remain attractive to PE players. New technology such as AI and machine learning will also hope to increase capital deployment. So PE firms have plenty of capital to deploy- when they’re ready.

Who wants to go public?

A few big-name Private Equity firms have considered going public in 2024, giving retail investors access to a broader selection of the asset class. General Atlantic, CVC Capital, and L Catterton are the names we could look forward to seeing on public markets in the new year.

General Atlantic, AUM $77 Billion, GA is looking at the possibility of going public to raise more money and expand its other arms of business, such as its private credit operation. Earlier this year they acquired Iron Park Capital Partners, a firm with extensive experience in public and private credit markets. This was a very strategic move by GA as the private credit market size has hit $1.3 trillion according to BlackRock.

CVC Capital, AUM $195 Billion, CVC had plans to go public earlier this year in Europe but delayed the process. They were looking to raise around $1.05 Billion to fund their plan to transform into a more diversified asset manager.

L Catterton, AUM $34 Billion, the consumer-focused Catterton had a big year as it won on Birkenstock going public, making almost a billion dollars, and as Birkenstock is up 21% on the year, they are still sitting on majority of the shares at around 155 million. They also hit a home run when global beauty company Oddity went public. According to the Wall Street Journal, Catterton’s initial $50 million investment is worth about $900 million.

Private Equity Titans Performance 2023

Apollo Global Management (NYSE: APO)- Up 48.70% 

KKR (NYSE: KKR)- Up 78.19%

Blackstone (NYSE: BX)- Up 72.32%

Carlyle Group (NASDAQ: CG)- Up 36.07%

Sources: Pitchbook, Wall Street Journal, Reuters, S&P Global