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Alternative Market Briefing

Private equity funds raised $600bn in 2019: Preqin

Monday, January 13, 2020

Laxman Pai, Opalesque Asia:

Strong fundraising, robust deal markets, and positive investor sentiment means the private equity funds industry finishes the decade with another banner year, says Preqin report.

Private equity funds closed in 2019 raised almost $600bn. This is the fourth year in a row to surpass half a trillion dollars, and the $595bn secured is the third-highest total on record, surpassed only by 2017 and 2018.

Dealmaking was also strong, despite declining slightly from the previous year. 2019 saw $393bn in buyout deals and $224bn in venture capital deals announced, compared to $493bn and $271bn respectively in 2018. This was boosted in part by sky-high valuations, which saw the average buyout deal size hit a 10-year high of $490mn.

The impact of high valuations on future performance has weighed heavily on fund managers, and many have been slowing the pace of their dealmaking as they make sure not to overpay for acquisitions.

As a result, dry powder has continued to climb and hit a new high of $1.43tn as of the end of 2019. Competition is unlikely to abate in 2020 - at the start of the year, there are over 3,500 funds in the market, collectively seeking $926bn.

The investor outlook for private equity is positive, so capital will continue to flow into these funds in the months ahead.

Christopher Elvin, head of private equity at Preqin said: "2019 marked another excellent year for the private equity industry - fundraising and dealmaking acti......................

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