Preqin Research shows private equity fundraising carries momentum of 2013 into Q1 2014 with strongest first quarter since financial crisis.
The global private equity fundraising industry has had the strongest start to a year since the global financial crisis of 2008. A total of 174 private equity funds reached a final close during Q1 2014 raising an aggregate $95bn in capital, the largest amount of capital raised since $173bn was raised by the 308 private equity funds that closed in Q1 2008.
Investment strategies used by hedge funds have evolved over the years, although the biggest changes have come in the use of computers to develop portfolios. Rosetta Analytics is a woman-founded and woman-led CTA that's pioneering the use of artificial intelligence and deep reinforcement learning to build and manage alternative investment strategies for institutional and private Read More
Yet this capital is being highly concentrated; the 174 funds that closed in the quarter is the lowest number of funds to close during any quarter since the crisis, highlighting how competitive the fundraising market still remains. Even with the potential 10-20% increase in figures that Preqin anticipates as more data becomes available, this is still likely to be the lowest number of funds to close since Q3 2010, when 192 funds raised $82bn.
Other Key Facts:
- Interim Closes: An additional $26bn was raised through 135 private equity funds holding interim closes throughout Q1 2014.
- Fundraising by Region: Private equity funds targeting North American opportunities raised $54bn, compared to $28bn for Europe-focused funds, $10bn for Asia-focused funds, and $3bn for investment outside of these three main regions.
- Fundraising by Type: Buyout funds raised $27bn in Q1 2014, a 15% increase compared to the $24bn raised by these funds in Q1 2013.
- Fundraising by Type: Fundraising for growth funds increased significantly in Q1 2014, with $9.6bn being raised by 11 funds that closed, compared to $6.5bn raised by 32 funds that closed in Q4 2013.
- Time on the Road: Funds that reached a final close in the first quarter of 2014 spent an average of 17.6 months on the road, lower than the 19.3 months it took funds to close in 2013 on average.
- Funds in Market: There are a record 2,125 private equity funds in market seeking an aggregate $749bn in capital, a notable drop from the aggregate $797bn being sought at start of 2013.
- Investor Plans: 90% of investors plan to commit either the same amount of capital or more in 2014 than 2013, and only 8% of investors intend to decrease their allocations to private equity over the longer term.
For more information and analysis, please see the factsheet that follows.
“The momentum of the final quarter of 2013 has carried into the new year, with private equity fundraising posting its strongest first quarter since the financial crisis. In addition, a sizeable $26bn was raised through private equity funds holding interim closes during the quarter, and it is encouraging to see the average time spent on the road falling for those funds managing to secure a final close.
Yet with dry powder now topping $1.1tn, the issue the industry still faces is how all of this capital will be deployed effectively. Deal making has made a bounce back at the start of the year following a decline in aggregate investment flows towards the end of 2013, but with many economies likely to be entering periods of sustained growth, this should amplify investment opportunities across the globe.”