First-half fundraising ranks highest since GFC

The first half of the year saw private equity funds raise a total of $415bn thanks to a post-pandemic rebound driven by huge LP appetites for the asset class and strong deployment.

Private equity funds raised more capital in the first half of 2021 than any other six-month period since the 2008 financial crisis, as GPs benefitted from buoyant markets and an uptick in dealmaking.

Capital raised hit $415 billion, a more than 50 percent rise from the same period last year, according to preliminary figures from PEI data.

The average fund size was $678 million, the highest since H1 2016 and 14 percent larger than last year’s $595 million.

The 10 largest fund closes in H1 2021 saw managers collect $147 billion between them, almost double the amount raised by the 10 largest funds in the same period last year, and more than a third of the total capital raised from January to June.

The biggest fund – Hellman & Friedman Capital Partners X – amassed $24.4 billion in just six months. KKR North America Fund XIII gathered $18.5 billion in May and EQT IX held a final close on €15.6 billion in April against a €14.75 billion target.

Investors are putting a premium on long established track records, especially those managers that have navigated a number of cycles in the past, noted Richard Clarke-Jervoise, global head of private equity and private debt for BNP Paribas Wealth Management, during a briefing early this month.

“Track record comes at a premium,” he said. “We have seen that in terms of the sizes of funds that are being raised where the most experienced managers have been able to raise much larger funds.”

Funds are performing well enough to raise and are coming back to market oversubscribed, even when exits have been slow, Simon Faure, managing director at IH International Advisors, told Private Equity International in June. As a result of this, investors need to take the time to look through their GPs’ portfolios and whether the assets deserve premium valuations, he added.

Capital raised by buyout funds rose to $222 billion in the first half from $90.3 billion last year, representing more than 50 percent of overall fundraising. While secondaries funds dominated H1 fundraising in 2020 and accounted for 15 percent of capital raised by dollar value, this proportion dipped in H1 2021 to 9 percent of overall value. Growth funds made up 17 percent of capital raised and 16 percent of funds closed.

Funds in market were targeting $703 billion as of 1 July, of which $285 billion will be focused on North America, $125 billion on Asia-Pacific and $68 billion on Europe.