Alt Investments

Private Capital Funds Set To Beat Money-Raising Totals In 2015 - Preqin

Tom Burroughes Group Editor 7 January 2016

Private Capital Funds Set To Beat Money-Raising Totals In 2015 - Preqin

The market for raising money in private funds - covering a range of asset classes - looked buoyant in 2015, new figures show.

The amount of money raised by private capital funds is expected to be equal or greater than the $590 billion raised in 2014, according to preliminary estimates for 2015 by Preqin, the firm tracking sectors such as private equity and hedge funds.

Last year saw 1,061 funds closed, securing a combined $550 billion in investor commitments. Preqin expects these totals to rise by 10 to 20 per cent as more information becomes available, it said.

Should the figures point to a year-on-year rise, it would represent the fifth consecutive year in which aggregate private capital fundraising has increased. 

“Fundraising looks set to remain competitive in 2016, with an increasing number of funds being marketed to investors. The number of funds in market has risen across 2015, and at the start of 2016 stands at 2,651. These funds are targeting an aggregate $946 billion, surpassing the previous record seen at the start of 2009, when private capital funds in market were seeking a combined $888 billion in investor commitments,” Preqin said in its 2015 Fundraising Update report.

Despite strong fundraising, the 1,061 funds closed in 2015 is 24 per cent lower than the 1,395 funds closed in 2014, and looks unlikely to match that total as new information becomes available. North America-focused funds increased their prominence in the private capital industry in 2015, accounting for 60 per cent of total capital raised, up from 56 per cent in 2014. In terms of size, the largest fund-raising concerned Blackstone Capital Partners VII, which closed in the fourth quarter at $18 billion, and is the fifth-largest buyout fund to be created ever.

Private equity
Global private equity fundraising slowed last year, with the annual total capital raised decreasing for the first time in five years; 687 funds closed raising a combined $287 billion, down from the $339 billion raised in 2014. However, the fundraising environment remains healthy, particularly in developed markets. 

Preqin said North America was the driving force behind fundraising, with funds focused on the region accounting for 60 per cent ($168 billion) of total investor commitments in 2015. 

The level of unspent capital (dry powder) available to private equity fund managers increased through 2015 to reach $752 billion at the end of the year, up from $695 billion at the end of 2014.

This figure represents the third consecutive annual increase in dry powder levels from the $565 billion recorded at the end of 2012, because firms are struggling to effectively deploy capital in a competitive and liquid deal market. 

At the start of 2016, there are a record 1,630 private equity funds on the road, targeting an aggregate $488 billion, beating the previous peak of $482 billion being sought at the start of 2008 by 974 funds.

Private equity funds closed in 2015 spent an average of 15.7 months being marketed to investors, the same as in 2014 but less than the average of 19 months that funds closed in 2013 spent on the road. 

 

Register for WealthBriefing today

Gain access to regular and exclusive research on the global wealth management sector along with the opportunity to attend industry events such as exclusive invites to Breakfast Briefings and Summits in the major wealth management centres and industry leading awards programmes