The big getting bigger was the story for 2023 and perhaps this year, according to a new report from research firm Preqin on private capital fundraising.
For private capital—predominantly private equity, but also private credit and venture capital, among others—last year marked a larger concentration of fundraising in the 10 biggest funds globally.
They scarfed up 18% of the total, almost double their portion in 2021. The top 10 raised $224 billion, some 80% higher than the previous year, while funds in the top 11 to 20 got $111 billion, down from 2022’s $122 billion.
The report declared that “more capital has landed in the hands of the best-known market participants, making the liquidity available to restart the investment cycle hard to come by for some fund managers.”
In the Preqin survey, 70% of private capital investors and fund managers cited reduced exit activity as their leading worry about fundraising in 2024. Fewer mergers and acquisitions and initial public offerings daunted fund general partners, Preqin noted: They have reduced opportunities to cash out their investments. The report found that for “some GPs, 2023 will be remembered as a year-long battle to win new business.”
The greatest 2023 fundraising hauls belonged to big-name entities: Blackstone Real Estate Partners X garnered $30.4 billion in new capital, Brookfield Infrastructure Fund V scored $30 billion and CVC Capital Partners Fund IX raised $28.9 billion.
Compared with 2021, these huge funds were slicing larger pieces of a smaller pie. The fundraising total for PE last year was $670.9 billion, versus $745.6 billion two years prior. Fewer participants were in the game: 876 PE funds raised money last year, down from 1,455 in 2022 and 2,009 in 2021.
One interesting countertrend: Despite the political obloquy surrounding them, funds specializing in environment, social and governance fared well, the report found: “More than 400 ESG-labeled funds closed in 2023, up from 316 in 2022, with aggregate fund size almost doubling.”
There are small signs, however, that the exit situation may improve, amid the Federal Reserve’s saying it intends to cut interest rates later this year and a continued strong economy, a PwC study indicated. In 2024’s first quarter, 14 traditional (not counting special purpose acquisition companies) initial public offerings took place, higher than last year’s nine for Q1 and 2022’s eight for Q1. Still not close to the 92 in 2021’s robust first quarter.
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Tags: Blackstone, Brookfield, CVC, ESG, fundraising, IPO, Mergers and Acquisitions, Preqin, Private Capital, Private Credit, Private Equity, PwC, Venture Capital
