Fundraising hit a new full-year record in 2021

The 10 largest funds, including Hellman & Friedman Capital Partners X and Clayton, Dubilier & Rice Fund XI, gathered $153bn between them and accounted for one-fifth of fundraising last year.

Capital raising by private equity funds in 2021 exceeded all full-year tallies on record, with at least $733 billion gathered, according to preliminary data from affiliate title Private Equity International’s Fundraising Report 2021.

The number of PE funds increased slightly to 1,384, from 1,313 in 2020. That number has been declining since 2018 as investors continued to concentrate capital with fewer managers.

Buyout funds accounted for 45 percent of capital raised in 2021 – down slightly from 51 percent in the prior year – and 19 percent by the number of funds closed.

Venture capital funds, meanwhile, made up 47 percent of the total count and gathered approximately 17 percent of capital raised. Secondaries, which represented about 14 percent of fundraising in 2020, this time made up only 7 percent of overall capital raised. Funds of funds, growth equity and venture funds recorded higher fundraising in 2021 than the year before.

The 10 largest funds, almost all of which are buyouts, gathered $153 billion between them, or about one-fifth of fundraising in 2021. This figure does not include Insight Partners XII, which as of November had raised $20 billion and has not yet held a final close, it is understood.

Among these mega-funds are: Hellman & Friedman Capital Partners X, which amassed $24.2 billion, making it the largest fund last year; Clayton, Dubilier & Rice Fund XI, which held a final close on $16 billion in February; and EQT IX, which raised €15.6 billion. Another notable close is KKR’s $15 billion haul for its fourth Asia-focused vehicle.

LP demand for the asset class, a catch-up in fundraising efforts that were delayed in 2020 and a rebound in acquisitions and exits volume were drivers of 2021’s record fundraising, as PEI explored in its fundraising look-ahead.

PEI’s LP Perspectives 2022 Study found that some 93 percent of investors intend to invest more or the same amount of capital in private equity over the next 12 months, encouraged by the prospect of higher returns. Investors also remain optimistic about the performance of their private equity portfolios, with more than a third of respondents expecting the asset class to outperform benchmarks.

Rampant fundraising activity will continue into 2022 with a target of at least $930 billion by funds in market, according to PEI data. The top funds currently in market, such as Carlyle Partners VIII and Thoma Bravo XV, are seeking at least $22 billion each, while Permira VIII has a target of €15 billion. The list is lengthy, with Blackstone, Advent International, Vista Equity Partners and Warburg Pincus also back on the fundraising trail with their latest flagship funds.

This article first appeared in affiliate publication Private Equity International