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Alternative Market Briefing

27% fewer 267 PE funds closing in Q1 raise 12% more money compared to one year ago

Monday, May 04, 2020

Laxman Pai, Opalesque Asia:

Fewer private equity funds reached a final close in Q1 2020, as the asset class is affected by the COVID-19 pandemic.

According to Preqin, a total of 267 funds closed, marking a 27% drop vs. Q1 2019. But the total amount of capital raised was significant: at $133bn, it surpassed the Q1 2019 figure of $119bn by almost 12%.

Large funds helped to boost the total amount collected, it said.

For instance, in January 2020 Lexington Capital Partners IX closed on $14bn, continuing an industry megatrend - large funds from more established fund managers are securing considerable capital commitments.

On the deals front, fewer transactions were completed as managers held off on M&A activity, anticipating that asset prices would fall amid a global recession. The impact is most clearly seen in venture capital data.

Globally, in Q1 2020 the number of venture capital deals dropped by 23% vs. Q1 2019, falling to 2,851. And there were nearly 1,000 fewer deals completed since Q4 2019.

The drop-off in the number of deals could reflect the disruptions to typical due diligence amid a lockdown - for a start, fund managers were unable to have face-to-face meetings with start-up founders because of social distancing.

Aggregate venture capital deal value slipped by 12% to $50bn when comparing Q1 2020 with Q1 2019, while the drop from Q4 2019 was 18%.

By region, the Greater China (GC) market was hit the hardest, though local fund managers said ......................

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