Home ListingApril 2, 2014

Private Equity: Back with a Bang

<em>Fundraising is up, but not everyone is managing to secure the capital.</em>

Reported by Featured Author

(April 2, 2014) – Private equity fundraising hit post-crisis highs in the first quarter of the year, data has shown.

Some $95 billion was raised, data monitor Preqin said, with further capital expected to be reported and added to that amount as more firms release their data.

The best ever fundraising quarter for private equity was the first three months of 2008, when funds raised $173 billion.

This momentum was carried over from a strong 2013, Preqin said, but there have been notable changes to the fundraising environment. Firstly, the number of funds that closed over the quarter—174—was the lowest quarterly figure since the crisis, highlighting the increased competitiveness in the industry.

This struggle for assets was also shown in a falling amount of time spent “on the road” by firms marketing their product to investors.

Preqin said there was a record 2,125 private equity funds in the market seeking an aggregate $749 billion in assets. At the start of 2013, assets sought totalled $797 billion.

Some good news for firms seeking assets came from the investors themselves. Some 90% surveyed by Preqin said they wanted to either maintain or increase their private equity stakes from 2013 levels.

This desire to build up holdings has already been made clear in some areas. European private real estate funding hit an all-time fundraising high, Preqin said, with $8.8 billion committed by investors. This total beat even 2007 and 2008 levels.

On the other side of the Atlantic, private equity-backed buyout investment was up 50% in the first quarter compared to the last three months of the year.

Preqin issued a word of warning, however.

“With dry powder now topping $1.1 trillion, the issue the industry still faces is how all of this capital will be deployed effectively,” said Ignatius Fogarty, head of private equity products at Preqin. “Deal making has made a bounce back at the start of the year following a decline in aggregate investment flows towards the end of 2013, but with many economies likely to be entering periods of sustained growth, this should amplify investment opportunities across the globe.”