In the first quarter of 2016 $100.9 billion was raised globally by 150 private equity funds, according to PEI Research & Analytics.
This marks a $680 million increase on the same period last year, and $17 billion more than in the first quarter of 2014, according to the Q1 Fundraising Report.
This upward trend reflects a growing investor appetite for the asset class, as fund managers bring bigger vehicles into the market to meet demand. In the first quarter, Advent Global Private Equity VIII was the largest vehicle to hold a final close, on $13 billion after just six months of fundraising. In comparison, the biggest fund to hold a final close in the same period last year was the $8 billion GS Mezzanine Partners VI.
Speaking to PEI’s Research & Analytics team, Rodney Lumpkin, a private markets portfolio manager at SEI Investment
Management Unit, said the amount of capital being raised was cause for concern. “Dry powder in all areas continues to grow at a time when valuations are relatively high, interest rates in the US are set to rise – albeit from extremely low levels – and equity markets continue to experience high levels of volatility,” he said. “While similar situations have occurred in the past, having all of these come together at once causes us to proceed with caution.”
The quarter also saw a sustained focus on global strategies, with funds active in two or more regions accounting for 49 percent, or $49.1 billion, of aggregate capital. The next most popular regional strategy was North America, with $36.7 billion raised for funds focusing on that area. Europe-focused funds raised $9.4 billion, while Asia-Pacific-focused vehicles experienced a $10.6 billion decrease to $3.15 billion from the first quarter of last year.
Proportion of funds close in Q1 above initial target
Number of funds closed
Number of secondaries funds in market as of April 2016…
… the number at the same point last year