A total of USD69.3bn was raised globally in Q1 2013 by 130 private equity funds across all strategies, according to Private Equity International (PEI).
The figure is roughly in line with fundraising totals for 2012 – on average USD73.7bn was raised in each quarter in the year – but represents a significant surplus on fund targets, with firms having aimed for an aggregate of USD59.9bn.
“The totals being raised are still no way near peaks of the pre-crisis period but closed funds are evidence of consistent returning confidence,” says Dan Gunner, director of research and analytics, PEI. “What’s most striking about these Q1 figures is the capital raised in excess of what fund managers were targeting. It reinforces the belief that for those managers with strong track records and a good story to tell, there’s ample opportunity.”
Funds with a focus on investment in North America proved the most popular, securing USD23.3bn – a figure marginally higher than quarterly averages in the previous four years. Those looking to deploy capital globally raised USD18.8bn. In 2012, such funds averaged quarterly fundraisings of USD31.8bn.
The single largest fund close in the quarter was that of Cinven, with The Fith Cinven Fund collecting USD6.5bn for pan-European investment. Both EnCap Investments, a US firm focused on investment in oil and gas, and Highbridge Principal Strategies, also US-based, raised USD5bn.
Buyout funds proved most popular, accounting for USD28.5bn of the total capital raised in the quarter. That figure is roughly in line with capital raised for the investment strategy in 2012 – USD137bn was raised in the year, a quarterly average of USD34.25bn.
Venture capital and growth equity funds also demonstrated a strong quarter, collecting USD17.9bn. Such funds had targeted capital of USD14.5bn.
Both distressed and secondary funds showed a marked decline relative to fundraising performance in 2012. The former raised just USD1.2bn compared to a total of USD15.3bn in the preceding 12 months. Secondary fund managers raised USD2.1bn – in 2012 they collected USD20.8bn.
In addition to funds outstripping targets in Q1 2013, a review of those in the market also suggests a returning confidence among private equity managers. Seven funds are currently each aiming to raise at least USD10bn with three firms, Apollo Global Management, TPG, and Warburg Pincus, targeting USD12bn to invest globally.
Funds aiming to invest in Asia-Pacific are notable for their growing confidence. In 2012, USD34.6bn was closed by general partners (GPs) with funds targeting the region. Currently, however, there are 417 – almost a third of all funds in the market – aiming to collect USD195bn.
“Fundraising activity since 2009 has shown a gradual, steady improvement and the number of funds in the market is high”, says Gunner. “The example of Asia-Pacific demonstrates neatly the disparity between what funds have raised in recent years and what they are aiming for now. There’s clearly an improved confidence globally but it’s never been more competitive to close funds. LP investors are increasingly choosing established managers with good track records so some of these funds on the road may not raise what they hope.”
