Fund managers raised $99 billion in first quarter, Triago said, according to sister website peHUB. The first quarter 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 private equity investments and distributions, the global placement agent said. Due to high distributions and a strong global stock market, more than 40 percent of limited partners are below their target allocations in private equity. This is prompting many LPs to invest “considerably more” in the asset class 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, such as the California Public Employees’ Retirement System and Yale University, to trim allocation targets.
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 private equity 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 private equity 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 the first quarter, 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 the first quarter of 2013, Triago said.
Luisa Beltran is a senior writer for peHUB.