PE HUB Wire Highlights, 7.12.19


private equity, mergers, M&A
Private Equity Editor Chris Witkowsky reflects at home. Photo by Wendy Witkowsky

Fundraising stays strong through the summer, Opting out of capital call sub lines

Happy Friday!

I spoke to an LP recently who said the flow of fundraising meetings has kept up through the summer without a break. I think there’s hope that the market slows down a bit in August so everyone can take a breather. And, according to the LP, there’s not that many closing scheduled over the next few weeks, so perhaps fundraising will taper off a bit in August.

U.S. buyout and mezzanine fundraising added $6.8 billion to its year-to-date total, which stands at $169.1 billion, according to Buyouts’ research. This compares to last year, when year-to-date total hit $85.2 billion. So far, this year is eclipsing last year’s already frantic fundraising pace. I wonder if activity will keep up through the year.

Established firms are driving fundraising with their main funds and new products, crowding out opportunities for new managers to gain a foothold. Around 395 first-time funds raised a combined $42.5 bilion worldwide last year, down from 553 first-timers that raised $74.6 billion in 2017, Preqin found.

“The vast majority of dollars are going to larger established managers,” said Mina Pacheco Nazemi, who listens to pitches from new managers as a managing director at Barings. “There’s so many managers out there … the competition is steep,” she told me in an interview for my annual first-time funds feature that ran this month. Check it out here.

Unique termCourt Square Capital is offering an interesting choice in its fourth fund, which is targeting $3 billion.

The firm is offering limited partners the option to opt out of capital call subscription lines of credit. It’s doing this by offering two structures on Fund IV — one that uses a capital call line of credit and one that does not.

My understanding is most LPs are choosing the structure that uses the subscription line of credit. Check out my story here. Have you heard of other firms offering this sort of choice on subscription lines of credit? Reach me at cwitkowsky@buyoutsinsider.com.

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