North America flagships, secondaries drive largest funds in market

Vehicles by Carlyle Group, Thoma Bravo and Lexington Partners were among the 10 largest in market as of mid-September, according to PEI data.

The 10 largest funds in market are seeking $142 billion between them – which, if successful, will add to the $415 billion already raised for private equity during the first half of the year, according to PEI data.

The biggest among them are Carlyle Partners VIII and Thoma Bravo XV, which are both seeking $22 billion.

Carlyle’s eighth flagship vehicle, which is understood to have a $26 billion hard-cap, could surpass the industry’s largest-ever fund, Blackstone Capital Partners VIII, which collected $26 billion in 2019. Thoma Bravo, which last year raised more than $22 billion across three funds, is expected to hold a first close in November for its 15th vehicle, affiliate title Buyouts reported last month (subscription required).

Secondaries funds Lexington Capital Partners X and Blackstone’s Strategic Partners Fund IX are also on the fundraising trail, targeting $15 billion and $13.5 billion respectively. If successful, Lexington’s Fund X would be the biggest standalone secondaries vehicle ever raised, knocking out both Ardian’s and Lexington’s own latest flagships, both of which collected $14 billion last year, as affiliate title Secondaries Investor reported (subscription required).

A US-based partner at a placement firm told Private Equity International that fundraising cycles are faster and the bigger names continue to stand out.

“The bar for new money has just gotten higher and higher,” the partner said. “While it is an interesting time in the market, where on the one hand there is so much capital being raised, we are also seeing many LPs with mature programmes that are pretty much spoken for until the first half of 2022.”

As a result, the partner added, the middle group – those firms that are not large enough and do not have exceptional returns – are getting squeezed out.

Two in five LPs say they are more likely to refuse an investment in their GPs’ latest funds than in recent years, according to Coller Capital’s latest Global Private Equity Barometer. Among North American investors, the proportion rises to almost half. LPs in the survey noted weak performance by GPs as the most important reason for refusing re-ups followed by a need to rebalance their investment strategy and liquidity constraints.

Some 3,060 private equity funds in market as of 1 July were targeting $703 billion between them, according to PEI’s H1 Fundraising Report.