PE Data Snapshot – Fundraising Market Share of SWFs and Family Offices Reaches New Heights

FOs and SWFs Rise in Importance

Sovereign wealth funds and family offices, frequently distinguished by a pronounced taste for co-investment, direct investment and separate accounts, have seen their share of annual private equity commitments increase at a remarkable clip since 2011. When co-investment, separate accounts and direct investment are considered, the combined fundraising market share of FOs and SWFs increased over the last five years by more than a third to 29.5 percent. In the same period, the market share of public and private pension funds dropped from a dominant 39.3 percent of capital raised – nearly twice the share of SWFs and family offices in 2011 – to 30.8 percent. The latter level is only slightly higher than the market share of SWFs and FOs today.

Percentage of Annual PE Commitments by Investor Type

Commitments by All Investors Rise, but SWFs and FOs Change PE’s Dynamics

Some $627 billion was raised for fund and non-fund PE investments last year, versus $267 billion in 2011. The absolute amount of money that all types of investors commit to private equity has risen sharply over the last five years. But sovereign wealth funds and family offices are having a greater impact on offerings today than any other group. As the two groups accelerate their PE commitments, managers are scrambling to please them, increasing not only co-investment and separate accounts, but also fund offerings focused on specialist strategies. Despite numerous exceptions – Canada’s retirement funds are perhaps the best known – pension plans, on balance, are considerably more traditionalist than either FOs or SWFs.

A More Diverse Set of PE Opportunities

Unconstrained by the pension fund industry’s payouts to the baby boom generation of retirees, and with still growing reservoirs of investable capital, SWFs, and FOs are likely to see their relative share of private equity commitments grow further, leading to a more diverse, but also more complex world of private equity opportunities.

Palico can Help

As managers and investors adapt to a changing private equity world and strive to find the right opportunities, Palico, the largest online marketplace for primary, secondary and co-investment offerings, can help them make connections quickly and efficiently, simplifying today’s more challenging choices.

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