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Alternative Market Briefing

COVID-19 negatively impacts private capital fundraising but there are also some bright spots

Thursday, May 07, 2020

Laxman Pai, Opalesque Asia:

COVID-19 is disrupting private capital fundraising as more than half of GPs surveyed by Preqin says that fundraising activity has slowed down.

Well over two-thirds (69%) of GPs Preqin surveyed say that fundraising from potential investors has been negatively impacted by COVID-19.

The report said that a key indicator that fundraising has been negatively affected is the pace at which it's occurring. Almost a third (32%) of GPs said that fundraising has "significantly slowed," while almost a quarter (23%) said that fundraising has "slightly slowed."

Why is this happening? One reason is that global lockdown is making it difficult for LPs to invest. Indeed, 82% of LPs surveyed by Preqin in April said that travel restrictions and social distancing are impacting their ability to make new investments in 2020.

The majority view that fundraising has slowed down is borne out in Preqin's Q1 2020 fundraising data. Across all private capital strategies, the number of funds reaching a final close is lower compared with Q1 2019 data.

In private equity & venture capital, the number of funds closed slid to 267, a 27% drop compared with Q1 2019 and one of the lowest quarterly totals seen in recent years.

In private real estate, 51 funds closed, down from 83 funds in Q1 2019. And the amount of capital secured fell by about 65% to $18bn.

In private debt, 25 funds closed, down from 38 funds in Q1 2019. And the amount of capital secured fell by ab......................

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