Natural Resources Fundraising Sees Capital Consolidation

Fundraising for natural resources is becoming increasingly concentrated among a smaller number of funds, according to London-based research firm Preqin.

A report from Preqin found that the largest unlisted natural resources funds are accounting for a larger proportion of the total fundraising in 2017 year to date. It also said the largest funds are seeing greater fundraising success, and are raising capital more quickly than smaller funds.

As of October, 67 unlisted natural resources funds had secured $50 billion in capital, according to the report. That is down sharply from last year, when 113 funds secured $70 billion, and is nearly half of the 133 funds that raised $65 billion in 2013. It also found that the proportion of capital raised by the 10 largest funds has steadily increased to 66% in 2017 year-to-date, from 59% last year, 52% in 2015, and 48% in 2014.

The report also found that:

• The average size of unlisted natural resources funds closed so far this year is up $93 million to $776 million, compared to $683 million for all of 2016. However, it is below the 2015 average size of $883 million.

• Four-fifths of the largest funds closed since 2012 have exceeded their target size, while 61% of funds of less than $250 million fell below their target size.

• 91% of funds of $2 billion or more completed their fundraising process within two years, compared to 57% of funds that are worth less than $250 million.