Private Equity Fundraising Outstrips Q1 Targets
by Terry Stidham
130 private equity funds raised $69.3 billion globally in the first quarter of 2013. This is similar to 2012 when on average $73.7 billion was raised in each quarter. However, the total represents a significant upside vs. fund targets of $59.9 billion. Although the LP's have improved confidence they continue to seek firms that can deliver.
PEI PRESS RELEASE
Private Equity Fundraising Outstrips Q1 Targets
- Private equity funds collected $69.3bn in Q1 – $9.4bn in excess of fund targets
- Buyout funds account for almost half all private equity closed funds
- High targets of funds in market indicate returning confidence
Private Equity International, the leading information provider for the global private equity, asset class (www.privateequityinternational.com), today publishes its quarterly report on global fundraising data.
Funds raised
The data, compiled by PEI’s Research and Analytics team, shows a total of $69.3bn raised globally, by 130 funds, across all private equity strategies in the first quarter of 2013. The figure is roughly in line with fundraising totals for 2012 – on average $73.7bn was raised in each quarter in the year – but represents a significant surplus on fund targets, with firms having aimed for an aggregate of $59.9bn.
“The totals being raised are still no way near peaks of the pre-crisis period but closed funds are evidence of consistent returning confidence,” said Dan Gunner, Director of Research and Analytics, PEI. “What’s most striking about these Q1 figures is the capital raised in excess of what fund managers were targeting. It reinforces the belief that for those managers with strong track records and a good story to tell, there’s ample opportunity.”
Funds with a focus on investment in North America proved the most popular, securing $23.3bn – a figure marginally higher than quarterly averages in the previous four years. Those looking to deploy capital globally raised $18.8bn. In 2012, such funds averaged quarterly fundraisings of $31.8bn.
The single largest fund close in the quarter was that of Cinven, with The Fith Cinven Fund collecting $6.5bn for pan-European investment. Both EnCap Investments, a US firm focused on investment in oil and gas, and Highbridge Principal Strategies, also US-based, raised $5bn.
Buyout funds proved most popular, accounting for $28.5bn of the total capital raised in the quarter. That figure is roughly in line with capital raised for the investment strategy in 2012 – $137bn was raised in the year, a quarterly average of $34.25bn.
Venture capital and growth equity funds also demonstrated a strong quarter, collecting $17.9bn. Such funds had targeted capital of $14.5bn.
Both distressed and secondary funds showed a marked decline relative to fundraising performance in 2012. The former raised just $1.2bn compared to a total of $15.3bn in the preceding 12 months. Secondary fund managers raised $2.1bn – in 2012 they collected $20.8bn.
Funds in the market
In addition to funds outstripping targets in Q1 2013, a review of those in the market also suggests a returning confidence among private equity managers. Seven funds are currently each aiming to raise at least $10bn with three firms, Apollo Global Management, TPG, and Warburg Pincus, targeting $12bn to invest globally.
Funds aiming to invest in Asia-Pacific are notable for their growing confidence. In 2012, $34.6bn was closed by general partners (GPs) with funds targeting the region. Currently, however, there are 417 – almost a third of all funds in the market – aiming to collect $195bn.
“Fundraising activity since 2009 has shown a gradual, steady improvement and the number of funds in the market is high”, said Dan Gunner. “The example of Asia-Pacific demonstrates neatly the disparity between what funds have raised in recent years and what they are aiming for now. There’s clearly an improved confidence globally but it’s never been more competitive... LP investors are increasingly choosing established managers with good track records so some of these funds on the road may not raise what they hope.”
Mr. Stidham speaks the language of both the seller and the buyer having vast experience on both sides of the transaction. He has been directly involved in the execution and successful closing of hundreds of investment banking and corporate finance transactions. Mr. Stidham has been instrumental in aiding thousands of business owners prepare their businesses for eventual sale by teaching them how to maximize efficiencies in operations leading to significant increased cash flow.
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