Dry Powder

Dry powder is capital that investors have committed to private markets funds but that managers have not yet called. Preqin, whose figures the industry treats as the reference, defines it as capital committed to a fund minus the amount the general partner has drawn down. The name is borrowed from the age of gunpowder: powder kept dry was powder that could still be fired.

The term works at two levels. At industry level it is an aggregate: S&P Global Market Intelligence, analysing Preqin data, put global private equity dry powder at $2.184 trillion as of 31 March 2025. At fund level it is one manager's uncalled capital, which is both their capacity to do new deals and a schedule of demands they will eventually make on their investors. Investors also use the phrase loosely for any cash held ready for opportunities, but the measured figure means committed, uncalled fund capital.

Why it matters for family offices

The same number reads differently on each side of the relationship. What a manager reports as dry powder, the family holds as an unfunded commitment: money promised, not yet paid, and payable on roughly ten business days' notice. A family with a book of fund commitments therefore owns a small slice of that headline figure, and its liquidity plan has to be able to deliver it.

Industry-level dry powder also shapes returns. More committed capital chasing the same deals pushes entry prices up, and managers nearing the end of an investment period may deploy, and therefore call, faster. Fund-level dry powder helps anticipate calls: a recent fund with most of its commitment uncalled will call steadily for years, while an older fund still holding uncalled capital is usually reserving it for follow-on investments and fees.

How it shows up in practice

Suppose a family office has committed €30 million across twelve funds and managers have called €17 million. The remaining €13 million is the family's contribution to industry dry powder, and the number its cash planning must answer for. The office tracks it by fund, owning entity and currency, and pairs it with a capital call forecast, so the €13 million turns from a lump sum into an expected schedule by quarter. When a manager reports its own dry powder alongside its deal pipeline, the office reads it as a preview of the calls to come.