Private equity fundraising dips to four-year low in H1

Growth funds had a 73% increase in capital raised with more than $50bn amassed in the first half of this year, according to PEI data.

Private equity fundraising for the first half of the year fell to the lowest half-year total since 2015, according to PEI data.

The 274 funds held final closes amounting to $177.2 billion, 7 percent less than the $191.3 billion raised in the same period last year. Average fund size also fell to $647 million from $706 million in H1 2018.

The largest raises were Advent International‘s $17.5 billion for GPE IX, Cinven‘s €10 billion for the Seventh Cinven Fund, TA Associates‘ $8.5 billion for TA XIII and Genstar Capital‘s $7 billion for Genstar Capital Partners IX.

“We have had a whole series of large fundraisings that went to the market rapidly,” said Jim Strang, head of EMEA at Hamilton Lane. “It is a bit quieter in the second half of the year – volume and value are both down.”

Strang added that Hamilton Lane – which commits to funds via its primary programmes and separately managed accounts – is getting ready for what could be a very busy 2020, with several large and high-profile fundraisings likely to happen in the first half of the year.

The top 10 largest funds in market were seeking $137.3 billion as of early July, according to PEI data.

Demand for growth funds is increasing, with $50.8 billion raised in the first half of this year, compared with $29.3 billion in the same period last year. Investors are hungry for co-investments, with two-thirds of LPs surveyed in PEI‘s LP Perspectives survey last year saying they wanted to access co-investments over the next 12 months.

Appetite for accessing this part of the market via dedicated investment vehicles also appears to be on the rise, with $6.5 billion raised, almost doubling the figure raised in H1 2018.

Among the largest of these vehicles include Warburg Pincus, which raised $4.25 billion for its first China-South-East Asia fund and Boston-based Summit Partners, which collected $4.9 billion for its 10th flagship growth-focused fund. On dedicated co-investment vehicles, the largest closed for the period is Hamilton Lane‘s $1.7 billion Co-Investment Fund IV and LGT Capital Partners‘ $1.3 billion Crown Co-Investment Opportunities II.

Looking at the regional focus of H1 2019 fundraising, funds dedicated to North America accounted for about 40 percent of total capital raised, followed by multi-regional funds (33 percent), Europe (17 percent) and Asia-Pacific (10 percent).