The merger of food giants Kraft and Heinz helped set one of several new post-crisis records in alternative investments in the first quarter of 2015, according to data from Preqin.
The $40 billion deal was backed by Warren Buffett’s Berkshire Hathaway and 3G Capital, and was by far the biggest transaction in the private equity buyout space in Q1. It was the biggest single deal since 2007, and the total value of buyout transactions in Q1 was also the highest total since 2007.
Elsewhere, Blackstone raised $14.5 billion for its Real Estate Partners VIII fund, the largest fund close ever in the closed-end real estate space, beating the previous $13.3 billion record that was also held by Blackstone.
“Fundraising looks set to remain a long and challenging process in 2015.” —Andrew Moylan, PreqinUnused capital among private equity funds also rose again in Q1, to an all-time high of $1.2 trillion.
Despite the records, the data also indicated a slowdown in general fundraising, with the lowest number of private equity fund closures in more than 10 years, and the lowest total for funds raised since the start of 2013.
“Following two strong years for private equity fundraising, data from the first quarter of 2015 suggests the private equity fundraising market might be slowing,” said Christopher Elvin, head of private equity products at Preqin.
However, he added that the massive level of dry powder indicated that “strong investment activity is set to continue.”
Preqin’s data shows that new private equity funds are continuing to get larger, despite the number of closes falling—a continuation of a trend of concentration that emerged last year. The data firm found that 151 private equity funds closed in the first three months of the year, based on information currently available. This is down from an average of 288 closes worldwide each quarter in 2014. The average fund size was $573 million, up from the $478 million average in the first quarter of 2014.
In Q1, 770 private equity-backed buyout deals were completed, down from 958 in Q4 2014. The $97 billion total was a 14% rise on Q4’s $85 billion aggregate, however.
In the private real estate sector, more than three quarters of the total raised in Q1 was taken in by just three funds, including the Blackstone Real Estate Partners VIII fund.
Andrew Moylan, head of real assets products at Preqin, said private real estate remained a crowded market with increasing competition for investor capital.
“The number of funds to close each quarter has fallen in recent years as investors are frequently focusing on investing their capital with firms with a long track record,” Moylan said. “For many of the fund managers marketing the 411 funds on the road, fundraising looks set to remain a long and challenging process in 2015.”
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