In 2019, 202 P. E firms committed a total of $301.3 billion. Among major firms, Blackstone took the lead by grossing $26 billion.
This is the highest fundraise post-recession. In 2017, the total recorded fund was $241.7 billion. In that year, there were nearly 257 fund closes, according to Pitchbook. This means an average US private equity firm closed nearly $940 million. In 2019, this figure was raised to $1.5 billion. following Blackstone, Advent International and Vista Partners, both mega-funds, had raised buyout funds amounting to $17.5 billion and $ 16 billion, respectively.
Private equity industry witnessed its biggest haul yet. Other than these mega-funds, several $10+ billion funds were closed in 2019. Some popular funds are Thoma Bravo’s Thirteenth flagship fund, Leonard Green & Partners’ Green Equity Investors VIII, and TPG Capital’s eight buyout fund. Notably, most of these funds are buyout strategies. While other strategies – growth and expansion got on the list last year. Dyal Capital Partners, for instance, raised $9 billion for its fourth fund and plans to use the fund to buy stakes in alternative asset management firms.
PE Witnessed highest fundraising post-recession
Many P.E firms might go all out and raise $15 billion or more. Wylie Fernyhough suggests Blackstone might look to raise up to $40 billion dollars. At the same time, the proliferation of mega-funds is boosted deal-making on the sides. However, amid the financial turmoil caused by the coronavirus outbreak, it has been difficult to put money to use. With a large amount of cash in hand, rainmakers are coming to believe that they are ready to strike deals.
Overall fundraising globally has done good well following the last year’s spell. In the first quarter of 2020, investors committed $132.2 billion to private equity funds globally. This is nearly 11.5% more than the $118.6bn collected by the industry in the same period last year, Preqin reports. The amount of fundraises trails by 1.6% the near-record of $134.4bn which reached in the first quarter of 2017 – the year when the industry fundraising peaked at $628 billion according to Preqin.
US private equity firm
The fundraise was primarily driven by large funds including firms like Lexington partners and energy-focused firm Energy Capital Partners which drove the quarterly total. However, the number of closed funds fell to 267 from 366 that closed in the first quarter months of 2019. In 2017, 543 funds closed fundraising in the same quarter.
Now that we’re in the middle of coronavirus outbreak, the situation seems gloomy and fundraising might decline. The outbreak has reduced travel, deal making is slow and limited partners are worrying about economy, deal making could see a serious decline in fundraising similar to financial crisis.
As fundraising is a slow process, many partners are hopeful that fundraising might not suffer as badly as it did after the financial crisis. Fundraising levels, however, could stay low for a long time. Wylie Fernhough, Senior Analyst, Pitchbook, says, Obviously, this is a little disheartening for private equity professionals.
While Blackstone had raised the largest fund to, $26 billion. It has taken the firm out for a year or two. Platinum Equity raised $10 billion in the first quarter, which wasn’t expected from the firm. The firm had already finished investing its previous fund. “Sometimes it’s better to be luck than good” Mark Barnhill, partner at Platinum Equity says.
While for small-medium investors without long-track of success and deep-pockets, it will be tough to gather capital, Adam Lewis at Pitchbook suggests.