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By: Brian Daly, Jason Daniel, Simon Ellis, Terence Rozier-Byrd Akin Gump
Fundraising's Effect on Dealmaking
Fundraising has been challenging over the past 12 months, primarily driven by the fact that distributions have slowed as a result of the lack of exit opportunities. For institutional investors such as pension funds and endowments, their ability to make new allocations has been hindered as they await distributions, while sovereign wealth funds-particularly those in the Middle East benefiting from rising oil prices-have been increasingly active.
Sponsors are taking various initiatives in a bid to bolster fundraising efforts, with greater use of first closing fee discounts and other incentives and a push to bring in brand-name LPs early to create momentum. Those raising capital are being more judicious in identifying a target fund size and in their approach to making substantive changes from one fund to the next, with those more difficult to justify in this environment.
We are seeing a real push on fundraising in Q1 2024 as sponsors look to tap limited dry powder early in the new year. There remains strong appetite for certain strategies, including private credit, infrastructure and energy transition, and we expect that investors will continue to favor allocating capital to existing relationships over new ones. Family offices and high-net-worth investors represent a growth opportunity for private funds, but come with operational challenges that r...................... To view our full article Click here
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