Private equity capital is continuing to fall into fewer hands, with third quarter fundraising totals outstripping last year’s in value across fewer funds.
Preliminary data from Private Equity International show 130 funds held a final close in the three months to 30 September raising $86.8 billion between them, compared with 142 funds raising a combined $74.6 billion in the same period last year.
Source: PEI data
The largest fund that closed during the period was Bain Capital‘s 12th buyout fund, which raised $9.4 billion in September, above its initial $7 billion target. The final amount included a GP commitment of $1.4 billion, around 15 percent of the fund.
Investors in that vehicle include Pennsylvania Public School Employees’ Retirement System, Tennessee Consolidated Retirement System and Virginia Retirement System, according to PEI data.
So far this year private equity funds have collected almost $381 billion, putting the year on track to beat 2016’s fundraising total of $446 billion.
Since 2014 the average fund size has been steadily increasing, hitting $715 million in the first half of this year. For some limited partners, this is cause for concern.
“The thing in today’s environment that we’re concerned about is that since managers are increasing their fund sizes and increasing their fund sizes very quickly, it forces them up market,” Brady Hyde, portfolio manager for private equity investments at UPS told PEI in an exclusive interview in August.
“If we don’t believe the skill-set of the manager is applicable to larger deals, we typically won’t invest with the manager.”