PE fundraising reaches 5-year high

During 2013, private equity firms globally have raised $356 billion, the largest amount since the beginning of the global financial crisis in 2008, according to a report by Private Equity International’s Research & Analytics division.

The total fundraising figure is also an 18.6 percent increase year-on-year, with GPs raising just over $300 million during 2012.

The uptick was largely driven by North America-focused GPs, with $119 billion earmarked for the region – a 33 percent increase from the $89 billion raised last year. Western Europe saw a slight increase, too, with GPs in the region raising $35.8 billion, compared to $27.3 billion last year.

In contrast, capital raised by funds targeting Asia-Pacific has declined since 2011, when just under $62 billion was raised. In 2013, Asian GPs collected just $27.7 billion – roughly on par with last year’s figure. 

Emerging market GPs have fallen out of favour with investors as growth rates have slowed and funds have struggled with realisations in some key markets, notably China and India. 

In terms of fund volume, 580 funds raised the $356 billion worth of capital this year, with just over $80 billion being raised across 119 funds during the final quarter of the year.

However, the report added that the total could rise as much as 15 percent for the year as more information becomes available.

Buyout funds and corporate private equity continued to represent the largest pool of capital raised, followed by venture capital and growth equity combined. Just under $169 billion was raised by buyout funds, compared to the $132.7 billion raised year-on-year.

The amount raised by mezzanine and debt funds grew by 45 percent, to $64.6 billion from $44.4 billion during 2012, while other fund strategies raised roughly the same as last year, according to PEI’s Research & Analytics divison.

The biggest fundraise this year was by CVC Capital Partners, collecting $14.2 billion for its European Equity Partners VI fund. This was followed by The Carlyle Group’s $13 billion North America vehicle – its sixth in market, and Warburg Pincus’ $11.2 billion global vehicle, the eleventh global product for the firm.

“2013 has been characterised by the continued returning confidence in private equity as an asset class. That said, the much-told story of a split between those that raise big funds quickly and those that struggle remains true. Where the likes of CVC, Carlyle and Apax have had real success, others are finding things much harder,” Dan Gunner, director of Research and Analytics at PEI, said in a statement.

“It’s also been interesting to see a strong shift towards debt and mezzanine opportunities as funds continue to diversify in their investment approach,” he added.