In Q3 2014, 185 private equity funds held a final close and secured an aggregate $73bn, a figure which is expected to increase by 10-20% as more information becomes available. This is the lowest quarterly amount of capital raised in 3 years, when $66bn was secured by funds closed in Q3 2011. Despite this, fundraising for the whole of 2014 is still likely to be strong following $111bn raised by funds closed in Q1 and $143bn in Q2.
According to Preqin, buyout fundraising was down in Q3 2014; 37 buyout funds closed during the quarter securing an aggregate $31bn, down from 49 funds in Q2 2014 that secured an aggregate $63bn. Interestingly, no mega buyout funds closed during Q3 2014; however, 7 mega buyout funds are currently in market seeking an aggregate $56bn. This includes Blackstone Capital Partners VII, TPG Partners VI and Hellman & Friedman VIII, which are all targeting over $8bn.
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Private Equity Fundraising: Other Key Facts
- Interim Closes: 158 private equity funds held an interim close in Q3 2014, securing an aggregate $30bn.
- Fundraising Success: 50% of funds closed in Q3 2014 exceeded their fundraising target, while a further 25% met their fundraising target.
- First-time Funds: First-time funds closed in Q3 2014 accounted for 9% of total capital secured by funds closed in the quarter, up from 7% in Q2 2014 and 5% in Q1 2014.
- Fundraising by Region: 91 North America-focused funds held a final close in Q3 2014 securing an aggregate $33bn, down from 137 funds that secured $80bn in Q2 2014. Europe-focused fundraising also dropped, with funds focused on the region securing $25bn in Q3 2014 compared to $40bn in Q2 2014.
- Largest Funds: The largest fund to close in the quarter was real estate fund Lone Star Fund IX, which held a final close on $7.2bn.
- Funds in Market: A record 2,205 private equity funds are currently in market seeking an aggregate $774bn, compared to 2,098 funds that were looking to raise $733bn at the start of 2014.
- Dry Powder: Dry powder for all private equity funds stands at an all-time high of $1.2tn, up from $1.1tn in December 2013. Dry powder solely for buyout funds is at $464bn, the highest figure since $481bn in December 2009.
“This quarter’s private equity fundraising fell short of the $100bn mark for the first time in over a year, with the lack of mega buyout funds closing undoubtedly a factor that contributed to these lower fundraising figures. However, the third quarter of the year is typically a quieter one for the industry, and with several mega funds currently in market, fundraising is likely to pick up again towards the end of the year. It is also encouraging to see first-time funds accounting for a greater proportion of capital than earlier in the year, with investors’ confidence in emerging managers continuing to increase.”
Christopher Elvin – Head of Private Equity Products, Preqin