Oversubscribed funds raised almost $30bn above their targets last year

Fifteen funds exceeded their targets by 23% on average, with General Atlantic and Blackstone achieving the highest disparity.

Private equity fundraising broke records in 2021, with some $733 billion gathered by funds across buyouts, venture capital, growth equity, secondaries and other strategies.

Last year’s tally is the highest since the global financial crisis and the fifth consecutive year to exceed half a trillion dollars, PEI data shows. Funds surpassing their capital-raising targets have been a common theme for the largest and most established players, given the supply-demand dynamic within the fundraising market and the supersized deal environment.

Ranking the top 15 fund closes of the past 12 months by how much money they collected above target shows that GPs have gathered nearly $30 billion more than the $148 billion they set out to raise.

For context, in 2018, it took every North America-focused fund tracked by PEI to collectively raise $178 billion. Over the past 12 months, it took just 15 funds to raise the same figure. The additional $30 billion these 15 mega-funds raised is also roughly equivalent to the total fundraising tally of co-investment vehicles and funds of funds four years ago.

These 15 funds exceeded their targets by 23 percent on average. Among them, General Atlantic saw the biggest jump from its initial target to the final close amount – 56 percent – for GA 2021, followed by Blackstone’s Strategic Capital Holdings II, which gathered 40 percent more than its $4 billion target. All but three funds in the list saw double-digit oversubscription by percentage.

Structurally, 2021’s results are an extension of what had been happening for a decade in terms of fundraising, dealmaking and AUM growth, Brian Vickery, a partner for private equity and real estate at McKinsey, told Private Equity International.

“There’s a bit of rotation of capital into higher-risk, return-orientated strategies,” he said. “In the past several quarters, we’ve had net outflows from core and core-plus open-ended vehicles after a long period of net inflows and opportunistic strategies. Some of that was for pandemic-driven opportunities. In PE and VC, investor dollars have gone into growth equity.”

Along with the $7.8 billion raised for its vehicle, General Atlantic gathered a further $16 billion via its managed accounts and evergreen accounts programmes last year, bringing its total committed capital base to $23.8 billion. Growth-focused TA Associates and Summit Partners had also gathered nearly 20 percent more than their original capital-raising targets for TA XIV and Summit Partners Growth Equity Fund XI.

The only Asia-focused fund in the list, KKR Asian Fund IV, gathered the region’s largest-ever vehicle for PE at $15 billion, or 20 percent above its $12.5 billion target. About 30 percent of the vehicle’s LP base committed capital to a KKR PE fund for the first time.

Many of these large PE firms see robust demand for their funds and capitalise on that by raising faster and raising more, said a European head of PE at a global investment firm.

The investor admits, however, that they wish these larger funds would reduce their fund size. “How would you go about it – invest more or invest in larger companies? A lot of the more interesting opportunities in the market are smaller, and PE firms have an additive advantage there,” the investor said.

This year may be a trickier time for fundraising for both large and small GPs given the tension between high targets and squeezed LP allocations. Some 23 percent of respondents to PEI’s LP Perspectives 2022 Study said they are overallocated for this year, up from 13 percent in 2021 and the highest percentage since the first survey in 2018.