Dry powder refers to the amount of committed but unallocated capital a firm or fund has on hand. We have estimated the dry powder of the African Private Equity Industry, using fundraising data and the average deployment period RisCura observed.

Dry powder levels averaged just around USD8.51bn until 2018, reaching recent highs of USD9.56bn in 2019, which was previously achieved in 2016. The levels declined to about USD6.5bn by June 2021. The rebound in 2019 correlates with the spike we saw in broader Africa fundraising noted in the fundraising charts.

The decline in 2021 was due to investment funds continuing to draw on committed capital – to invest in new businesses and support existing investments through the pandemic – without the corresponding flow of commitments from LPs through fundraising. This reduction in dry powder should contribute significantly to stabilising private equity pricing going forward.

In the remainder of the world, according to Pitchbook current dry powder levels in VC and PE hit unprecedented sums, with around USD1.5tn available to fund managers worldwide in 2020. While fuelling private equity deal making, and with more cash on hand than ever, firms are grappling with how to deploy it and the impacts it could have on returns.