PEs raised $121 bn in Sept quarter: study

Private equity (PE) funds across the globe collectively raised $121 billion of capital in the third quarter of 2018 ending September (Q3), alternative asset data tracker Preqin said.

The figure was higher than what the funds raised in the previous quarter, although the number of funds that achieved their final close decreased, Preqin said in a report.

“The disparity is because a small number of large funds have accounted for most of the capital raised. The 10 largest funds closed in Q3 have secured a combined $66 billion, 55% of the total,” the report said.

North America-focused funds dominated fund-raising, with 126 funds securing $82 billion.

These funds saw a significant increase in capital raised from Q2 when 144 such funds raised $42 billion.

Over half (55%) of capital raised in Q3 was secured by the 10 largest vehicles that closed this quarter.

The largest fund closed in the third quarter was Carlyle Partners VII, which secured $18.5 billion.

According to Preqin, as of September-end 2018, there are 3,922 private equity funds in market seeking to raise a total of $956 billion.

“Of the 10 largest private equity funds in market, six are Asia-focused, while four are North America-focused. The largest fund in market is the China Structural Reform Fund, which is seeking to become the largest growth vehicle of all time at $53 billion,” the report said.

“While the key theme of the first half of 2018 was the slowdown from 2017’s frenetic fundraising levels, Q3 seems to be picking up pace again. While the full-year fund-raising total is unlikely to match 2017, the pace is still on par with activity seen in 2015 and 2016,” said Christopher Elvin, head of private equity, Preqin.

Moreover, fund-raising is increasingly being concentrated among a small number of large fund managers, said Elvin.

“This is a trend we have noted before, but it is accelerating, possibly in response to investor uncertainty. With half of investors expecting public markets to see a downturn within the next 36 months, they may be seeking the security of fund managers with whom they have an existing relationship, and who have a proven track record,” he added.

Overall, the third quarter witnessed a total fund-raising of $214 billion by 327 private capital funds, across categories such as infrastructure, credit, real estate and private equity.

“The first three quarters of 2018 saw funds raise an average of $192 billion each quarter, more than in any previous year except 2017. While 2018 seems unlikely to break last year’s fund-raising records, we have still seen 11 of the top 100 largest ever private capital funds close—on par with all of 2008 and fewer than only 2016 and 2017 (each with 13),” the report said.

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