The pace of private equity fundraising slowed in Q1 2015, following a strong end to 2014. The quarter saw the lowest number of funds close in any quarter for over 10 years, although this figure may increase by 10-20% as more information becomes available. This compares to an average of 288 fund closes in each quarter in 2014. The amount of capital secured by funds closed in the quarter – $94bn – was also less than was raised in any quarter since Q1 2013, when $91bn was raised. Although many investors are looking to grow their allocations to the asset class, these fundraising figures show the trend for investors to concentrate their investments among a smaller number of large firms is continuing.

Private Equity Fundraising

Other Key Private Equity Fundraising Facts:

  • Fundraising Success: 50% of funds closed in Q1 2015 exceeded their fundraising target, while a further 24% met their target. This compares to 69% of funds closed in 2014 which met or exceeded their targets.
  • Interim Closes: On top of the $94bn raised in Q1 2015 by funds holding final closes, a further $34bn was raised through 130 private equity funds holding interim closes throughout the quarter.
  • Time on the Road: Private equity funds closed so far in 2015 have taken an average of 14.8 months to reach a final close, the shortest time since 2008 when the average was 14.5 months.
  • Average Fund Size: Average fund size for those vehicles to close in Q1 2015 stands at $573mn, an increase of 20% from the average fund size of $478mn seen in Q1 2014.
  • Fundraising by Region: North America-focused funds attracted 67% of all capital raised in the first quarter of the year, whereas Europe-focused funds accounted for just 19%.
  • Largest Funds: The largest fund to close in Q1 2015 was Blackstone Real Estate Partners VIII which raised $14.5bn in institutional capital. This is followed by the $5.6bn Starwood Global Opportunity Fund X.
  • Funds in Market: The number of funds in market has dipped slightly from the high of 2,235 at the start of the year to 2,206 as of the end of March 2015, suggesting that some managers may be delaying coming to market when faced with such intense competition.

Private Equity Fundraising

For more information and analysis, please see the factsheet that follows.

Comment:

“Following two strong years for private equity fundraising, data from the first quarter of 2015 suggests the private equity fundraising market might be slowing. The quarter saw fewer funds reach a final close than in any other quarter for over 10 years, and not since the start of 2013 has less capital been raised in a quarter. Furthermore, the number of funds on the road seeking capital, which has been rising steadily since 2010, has taken a small dip in March 2015.

Yet there are also a number of successes: the time being taken to raise a fund on average has dropped considerably, and now sits at less than 15 months; seventy-four percent of funds closed in the first quarter met or exceeded their fundraising targets; and the average fund is notably larger than funds closed in 2014. Private equity firms have also had a strong quarter for deal making, and with over $1.2tn in available capital for investments (dry powder), strong investment activity is set to continue.”

Christopher Elvin – Head of Private Equity Products, Preqin

Private Equity Fundraising