Private equities have witnessed 20 percent growth so far in 2013 in their capital raising as compared to the same period last year.

Private Equity Sector

Preqin’s recent report reveals fund raising so far in 2013 has been encouraging, though 2013 witnessed a drop in the number of funds raised.

Private equity raised $311 billion

Preqin’s report points out $311 billion has been raised by private equity funds closed during the first three quarters of 2013.  This translates into an encouraging 20 percent growth when compared to $259 billion raised during the same period in 2012.

Preqin’s data reveals during the third quarter of 2013, 179 private equity funds closed securing an aggregate of $87 billion. However, the report from the leading information provider notes the figures are expected to increase by about 10 to 20 percent, as more information is made available.

North America accounts for 66 percent

Slicing the data further in terms of region, the report points out 113 North America-focused funds closed during the third quarter, having secured $57 billion. This represents a substantial 66 percent of aggregate capital raised by funds closed in the quarter.

Twenty-four Europe-focused funds closed during the quarter securing $22 billion, while 20 Asia-focused funds secured $4 billion.

The following picture highlights geography-wise breakdown of private equity funds closed in third quarter of 2013:

Geographic breakdown of PE funds closed

Reduction in average fund size

In terms of average size of private equity funds, the average size dropped to $532 million from $696 million, when funds closed in the third quarter of 2013 are compared with the second quarter of 2013.

Similarly, the average size of buyout funds dwindled significantly from $1.8 billion for funds closed in the second quarter of 2013 to $996 million in the third quarter of 2013.

Time to close

During 2013, funds closed since the beginning of 2013 have taken an average of 18.5 months to reach a final close. During 2012, it took 17.8 months on average for funds to reach a final close. However, during 2006, it took just 11.3 months for funds to reach a final close. The following graph depicts the various timelines since 2006:

Average time to close for PE funding

Largest fund to close

Preqin’s report highlights CVC European Equity Partners VI was the largest fund to close in the third quarter of 2013, having raised €10.5 billion in 7 months. CVC represents a dominant 63 percent of capital secured by Europe-focused funds that closed during the third quarter of 2013.

North America-focused GSO Capital Solutions Fund II, a distressed debt, closed on $5 billion.

The following table depicts the largest funds private equity to hold a final close during third quarter of 2013:

10 largest PE funds

Preqin’s report concludes with a record number of private equity funds currently in the market competing for capital, so the rest of 2013 can be expected to be highly competitive for fund managers.