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Alternative Market Briefing

Private funds weather new headwinds

Wednesday, June 01, 2022

Bailey McCann, Opalesque New York:

First quarter private fundraising figures were a little less than one-quarter of total 2021 fundraising, which could indicate a fundraising slowdown, according to the latest data from Pitchbook. Global private equity fundraising hauled in $94.8 billion committed across 131 vehicles. Evidence shows that private market fund managers may have finally pushed fundraising too far for the taste of LPs, raising much larger funds more quickly than historical norms.

According to Pitchbook, while GPs have pushed for larger and larger funds, LP allocations are not keeping up. As a result, fundraising cycles could extend if GPs cannot find new sources of capital. The median number of months to fund close increased to 21.8 months through the first quarter, with some investors hitting their maximum yearly allocations very early in the year.

Pitchbook data shows that GPs who have had prior funds in a fund family increased the size of their next fund 82.2% of the time in Q1 2022. The median step-up was 60.9%.

Median years between fund closing have dropped to 2.4 - the lowest figure since 2008. That said, the gap between managers that can raise funds easily and those that struggle is widening. The long-term average is a 13.2 month difference, however that number increased to 16.5 months in the first quarter.

So where is all of this......................

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