PE funds raised $345 bln in 2016: Preqin

  • 807 funds raised combined $345 bln in 2016
  • 944 funds raised combined $328 bln in 2015
  • 1,835 funds out fundraising in 2017, targeting $526 bln

Fundraising posted another record-breaking year in 2016 with 807 funds raising a combined $345 billion as of Jan. 3, according to Preqin.

The total may increase another 10 percent as more information becomes available, which would put it above the post-crisis record of $348 billion set in 2014, Preqin said. The $345 billion also represents a roughly 5 percent jump from 2015 when 944 funds totaled $328 billion, the data provider said in its report, “Private Capital in 2016: Continuing 2015’s Momentum.”

The $345 billion marks the fourth consecutive year in which annual fundraising totals exceeded $300 billion. The amount, however, is shy of the nearly $400 billion set by funds closed in 2007 and 2008, which is considered the boom time of private equity.

While fundraising was brisk in 2016, the number of closed funds, 807, represents a nearly 15 percent drop from the year before. Christopher Elvin, head of private equity products at Preqin, said activity is hitting record-breaking levels, with investor demand high.

“However, the congested nature of the marketplace can make the fundraising process difficult, especially for smaller or less experienced managers, who will need to find effective ways of differentiating themselves and their funds,” Elvin said in the report.

Private equity was also more successful in 2016, with more funds reaching their goals. A quarter, or 25 percent, of pools in 2016 didn’t hit their objective at final close. This is down from 41 percent of funds in 2012. At the same time, more funds exceeded their targets in 2016. Half of funds that closed in 2016 exceeded their goal, up from 33 percent closed in 2012, Preqin said.

More funds are out marketing. At the beginning of the year, 1,835 private equity pools were fundraising, targeting an aggregate of $526 billion. This is up from the start of 2016 when 1,630 funds sought a combined $488 billion, Preqin said.

Action Item: To contact Christopher Elvin: celvin@preqin.com

Stephen Schwarzman, co-founder, chairman and CEO of Blackstone, speaks at the Milken Institute Global Conference in Beverly Hills, California, on May 3, 2016. Photo courtesy Reuters/Lucy Nicholson