PE Key Trends Blog

PE Data Snapshot – The Number of Funds Seeking Capital Hits a New Record

Mar 1, 2016 11:36:48 AM

Tags: PE Data Snapshot, V2

According to Palico data, 2,720 private equity funds are currently seeking $965 billion.

While the number of private equity vehicles in fundraising mode is up nearly 6 percent over the past year, the aggregate sum sought is static compared to 12 months ago. According to revised figures, 2,570 PE funds were hoping to raise $972 billion a year ago - just 0.7 percent more than the sum targeted today. Yet in today’s even more crowded fundraising marketplace, commitments have accelerated compared to a year ago. Some $65 billion has been committed to PE funds this year through February 15, or 6.6 percent more than at the same time last year. Though it’s early in the year, the figures illustrate some interesting trends.

Committed Capital YTD & Number of Current Fundraisings - Strategies

YTD Commited Capital vs. Current Fundrisings
Buyout Fundraising Drops, as Real Assets and Funds-of-Funds Come to the Fore

Committed Capital YTD & Number of Current Fundraisings - Regions

YTD Commited Capital vs. Current Fundrisings

Buyout fundraising in the first half of the quarter dropped 48 percent to $11 billion from $21 billion in the same period last year, with capital seemingly siphoned away by both funds-of-funds and real asset vehicles. The latter, focusing on investment in tangible goods like real estate, fossil fuels, metals and infrastructure, have been boosted by a hunger for yield in a low interest rate environment and the perception of deep value in the battered oil market. Funds-of-funds have steadily regained popularity in the past couple of years due to growing investment in secondaries, either through pockets that buy stakes in existing funds or through specialist secondary funds-of-funds. Other factors playing a role in fund-of-fund appeal are growing niche specialities in everything from first-time fund managers to emerging markets. Buyout funds - which are likely to claw back market share as the year progresses - have nonetheless seen their appeal decline because of high prices for investments and the growth of alternatives to classic fund investment, including co-investment and managed accounts.

The U.S. Loses Appeal while Emerging Markets Raise Funds Despite Turmoil

Private equity funds investing in the U.S. and Canada remain the most popular in the world, but they’ve seen a significant drop in commitments, attracting $30 billion through the first quarter’s half-way mark, after pulling in $36 billion by this point in 2015. Meanwhile, every other major region of the world - lead by Europe - is winning more commitments. European-focused PE funds have raised some $20 billion in 2016, compared with $14 billion in the same period last year. Much of the increase is due to the the sharp fall in the euro since 2014. More than two-thirds of investors polled recently by Palico equated the dropping euro with the creation of “highly attractive” European investment opportunities. Underlining the long-term focus of PE investors, is the resilience of emerging markets. Latin America, despite recession in Brazil and plummeting regional currencies, has tripled commitments year-to-date compared to the same period last year, raising $2 billion in PE funds. The Middle East and Africa have raised the same amount, double the sum committed by this time last year, despite plunging oil prices and economic slowdown. Meanwhile the Asia-Pacific region, which has seen stock markets dive and the economy slow dramatically in China, registered a more than 17 percent increase in fundraising year-to-date versus the same period last year.

Palico Helps Investors and Managers Find Each Other

Today’s crowded fundraising market can make it difficult for fund managers to stand out and its diversity can overwhelm the resources of investors. By bringing the world of private equity to desktops and smart devices, Palico makes the process of discovery and engagement easier. Indeed, Palico members represent 43 percent of today’s record 2,720 PE fundraisings.

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