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New Year, New Trends: NAV vs. Dry Powder Over the Past Quarter Century

Companies and Markets

By Colin Devereaux  |  January 6, 2022

A new year is the time for resolutions and change. With this mindset, we looked back at the private markets to see where momentum has changed and the trends that have formed over the past quarter century. Using Cobalt Market Data Analysis, we identified the relationship between NAV (net asset value) and dry powder and how it has changed over the years, dating back to 1995.


Key Takeaways

  • At the beginning of the pandemic in the first quarter of 2020, NAVs started to diverge from the trend over the previous decade in which the pair rose at similar rates. NAVs now sit at roughly double the amount of dry powder in the market ($2.6 trillion vs. $1.4 trillion).
  • While NAVs have grown at an accelerated rate, dry powder has stagnated over the past few quarters, even decreasing slightly from the fourth quarter of 2020 to the first quarter of 2021.
  • The last divergence between NAVs and dry powder was seen after the last global financial crisis, from 2009 to 2011 when NAVs rose as dry powder decreased. This may have been caused by firms increasing their spending on distressed, undervalued assets in the wake of the recession, funded mostly by existing capital on hand. After this, the above-mentioned trendline was set, where both figures were rising at similar rates throughout the rest of the decade.
  • One explanation for this latest emerging gap between NAVs and dry powder is that even private equity has not been immune to the “everything bubble” of the past 18 months. Valuations across various asset classes, such as public equity, have experienced similar exponential growth the past six quarters. As for dry powder, this growth has been seen organically, meaning firms didn’t have to raise higher amounts of capital than normal, or use an outsized amount of the current supply to achieve this growth. Because of this, we see dry powder staying relatively steady, rather than an upcoming large growth or depletion.

Looking Ahead

  • Based on the previous financial crisis recovery, we should expect NAVs and dry powder to again align on a similar growth trajectory in the next 1-2 years. That being said, there are new circumstances and lingering factors (supply chain issues, inflation concerns) that may come to shape a different relationship between the two over the next decade.
  • No matter the relationship between the two trendlines in the near future, it seems highly unlikely that we will see dry powder surpass NAVs any time soon, as they last did in the second quarter of 2009.

This article was originally published on the Cobalt web site.

The information contained in this article is not investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.


Colin Devereaux

Content Specialist, Cobalt, a FactSet Company

Mr. Colin Devereaux is a Content Specialist at Cobalt, a FactSet company. In this role, he oversees Cobalt Market Data, working to continually improve the timeliness, accuracy, and scope of the data set. He also works with private equity and venture capital clients on data-request projects and internally with sales and marketing to ensure the market data and benchmarking data services are properly leveraged. Mr. Devereaux earned a degree in finance from Bentley University.