Fundraising was easier and quicker for many GPs during the first three months of the year, according to the Triago Quarterly.
Fund managers raised $99 billion in first quarter, Triago said. The Q1 total is the highest since 2008 and pushed dry powder to a record $1.1 trillion, the report said.
Investors, through the end of April, received some $22 billion in net cash from realized PE investments and distributions, the global placement agent said. Due to high distributions and a strong global stock market, more than 40 percent of investors are below their target allocations in PE. This is prompting many LPs to invest “considerably more” in PE than they were a year ago, Triago said.
“As a result, fundraising has eased for many general partners, with the time it takes to raise funds falling and significantly fewer funds failing to hit planned levels,” Triago said.
Fundraising could rise to $461 billion this year, up 10 percent from Triago’s revised total of $419 billion last year, the placement agent said.
Still, some investors are cautious. Triago cited the record amount of uninvested capital and near-record purchase price multiples that are causing some LPs, like the California Public Employees’ Retirement System and Yale University, to trim target allocations.
The Triago Quarterly also spoke to two LPs and a GP about the increasing popularity of real assets. The sector includes areas like oil and gas, mines and toll roads, Triago said. Fundraising for real asset PE funds soared 147 percent to roughly $12 billion in first quarter, the placement agent said.
Other notables in the Quarterly include:
— Secondary volumes hit “unprecedented highs” during the first four months, with $11 billion of exiting PE funds changing hands.
— Funds now take four years on average to invest over half of committed capital, which creates a big drag on returns.
— In the United States, 74 funds wrapped up fundraising during the first three months. Nearly all, or 95 percent, closed on their targeted levels, according to Pitchbook data. This is up from 80 percent in 2013.
— Good news in Asia. Funds for that region held final closes on $9.1 billion in Q1, accounting for more than 9 percent of all capital raised, Triago said. This compared to 3 percent for the same time period last year. Asian funds collected 5x more than the combined totals for Africa, Eastern Europe, the Middle East and Latin America, which all saw fundraising drop significantly compared to Q1 in 2013, Triago said.
Click here to read the Triago Quarterly.
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