PE fundraising sees near $100bn drop after post-covid surge

The $516.9bn raised during the first three quarters of this year remains the second-highest figure ever recorded, according to PEI data's latest fundraising figures.

The first nine months of this year saw a fall in fundraising compared with the highs of the previous year, although performance remained strong, according to preliminary third-quarter fundraising data from Private Equity International.

Between Q1 and Q3 2022, $516.9 billion was raised by PE funds in market – a year-on-year decline of $98.6 billion from 2021’s $615.5 billion over the same period. Nonetheless, 2022’s figure represents the second-highest total ever recorded, surpassing previous Q1-Q3 records set in 2019 ($457.51 billion) and 2017 ($467.43 billion).

Following last year’s jump in fundraising activity after 2020’s covid slowdown, capital raising this year has not matched 2021’s highs – so far.

Faith in the asset class has been strong for some time: according to last year’s LP Perspectives study, 36 percent of respondents believed private equity would exceed performance benchmarks across 2022. Additionally, almost half of LPs (46 percent) said they intended to invest more capital in the asset class over the course of 2022.

As PEI reported in July, the fundraising environment is still in a state of excitement; that means recruitment is on high alert, putting additional pressure on fund managers. “This is the craziest environment I’ve ever seen,” Sita Kolossa, chief executive and founder at Nordbridge, told PEI at the time. “It’s just, ‘We need people now. We need people ASAP.’”

The preliminary data for PEI‘s Q3 fundraising report found that buyouts was the dominating strategy in the period, with a total of $247.8 billion raised. Venture capital was in second place, attracting $130 billion in investment, while third place was taken by growth equity, which garnered $72.8 billion.

Regionally, North America continues to lead the pack in terms of capital targeted, at $478.5 billion. Following behind are multi-regional funds, with $365.7 billion, and Asia-Pacific, at $129.5 billion. During the period, North America-focused funds raised $218.3 billion across 636 funds.

The biggest fund close of the period was Advent International‘s GPE X, which closed in May 2022 on $25 billion against a $23 billion target. KKR’s North America Fund XIII raised $19 billion against a $14 billion target, while Insight Partners XII raised $17.23 billion – $5.23 billion more than its target of $12 billion.