Third-quarter fundraising: PE poised for record year

Fundraising as of end-September was at its highest since 2008 with some $535bn raised by 965 funds.

Private equity fundraising could hit a record this year as capital allocation into the asset class shows no signs of abating.

The first three-quarters of 2021 saw private equity funds raise $535 billion, the largest year-to-end-September total since 2008, according to preliminary figures from Private Equity International’s Q3 Fundraising Report.

That capital-raising total is also 40 percent more than the $388 billion gathered during the equivalent period last year.

The higher tally can be partly attributed to the 10 largest funds closed during the period. They amassed $143 billion between them and represented 27 percent of capital raised. The $24.4 billion Hellman & Friedman Capital Partners X was the largest fund to close, followed by EQT IX and Clayton, Dubilier & Rice Fund XI, which collected €15.6 billion and $16 billion respectively.

Partners Group raised the largest vehicle during the quarter, gathering $6 billion for Partners Group Direct Equity 2019, nearly double what it collected for its €3 billion predecessor.

“The biggest names continue to stand out, and if LPs recognise the name, it becomes easier to raise capital,” a US-based managing partner at a placement agent told PEI. That means in today’s crowded market, with GPs deploying and returning capital faster than in any previous cycle, the bar for attracting LP capital is higher for both established and emerging managers, the partner noted.

This is unlikely to change over the next 12 months. In a survey by EisnerAmper, half of respondents said they expect LPs to increase their exposure to PE the most over other asset classes. Within PE, growth equity and impact strategies were most popular.

About 20 percent of the 965 funds that closed from January to September were buyouts-focused and gathered nearly 50 percent of capital raised. Venture capital funds accounted for 47 percent of the total count and 16 percent of capital raised. Growth, meanwhile, made up 16 percent of funds and a fifth of capital raised.

North America-focused funds – similar to prior years – attracted the majority of capital raised (45 percent). Asia-Pacific and Europe-focused funds accounted for about 8 percent each of fundraising.

Funds in market were targeting $797 billion as of 30 September, of which some $147 billion is expected to be gathered by the 10 largest funds in market. This includes Carlyle Partners VIII and Thoma Bravo XV, which are both targeting at least $22 billion.