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Private Equity Fund Closings in Q3 at Record Low

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Global private equity fundraising slowed through the third quarter, as 170 funds closed with a combined $117 billion, down from 317 funds that closed with $129 billion in the second quarter, according to Preqin, the alternatives data provider.

Year to date, private equity funds have raised an aggregate $385 billion, down from $388 billion in the first three quarters of 2014.

Preqin reported that the July-to-September tumble was the third consecutive quarterly decline in fundraising, and represented a 29% decrease from the $165 billion raised in Q4 2014, the most recent fundraising peak.

“The number of funds closed is the lowest of any quarter Preqin has on record,” the firm’s head of private equity products, Christopher Elvin, said in a statement.

“Despite recent turmoil in Asia, there has been an increase in fundraising for funds focused on the region, and on Rest of World [outside Asia, North America and Europe]. This, though, does not offset a lack of growth in the mature North American and European markets, as both the number of funds closed and aggregate capital figures continue to fall there.”

According to the report, 45 private equity funds focused on Asia and Rest of World closed in Q3, raising a combined $23 billion. In Q2, 51 funds focused on those regions raised just $11 billion.

Other Fundraising Facts

Besides the aggregate capital raised by funds that held final closes in Q3, 125 funds held interim closes, raising an aggregate $20 billion.

Private equity funds closed through the end of September had to spend an average of 16.3 months on the road to reach a final close. This figure was up slightly from Q2’s 16.2 months, but was still below the average 16.7 months that it took for closed funds to raise capital in 2014.

Buyout fundraising overall amounted to $47 billion globally, as North American buyout products recovered from a weak Q2, raising $18 billion in Q3, and European fundraising increased from $13 billion last quarter to $20 billion in Q3.

After three secondaries funds raised $12 billion in Q2, only one was in the game in Q3, raising $500 million. Fundraising totals for venture capital, real estate and funds of funds all decreased, while infrastructure fundraising rose from $4 billion in Q2 to $13 billion in Q3.

The Swedish buyout fund EQT VII had the biggest close in the third quarter, $7.5 billion.

Other notable closes included the following:

  • ArcLight Energy Partners Fund VI (infrastructure), U.S., $5.6 billion
  • TA XII (buyout), U.S., $5.3 billion
  • RRJ Capital Master Fund III (buyout), Hong Kong, $4.5 billion
  • Carlyle Europe Partners IV (buyout), U.S. $4.2 billion
  • Carlyle Realty Partners VII (real estate), U.S. $4.2 billion
  • CLF Fund II (real estate), Singapore, $3.7 billion
  • Insight Venture Partners IX (general venture), U.S., $3.4 billion
  • ICG Europe Fund VI (mezzanine), U.K., $3.4 billion
  • Montagu V (buyout), U.K., $3.1 billion

The number of private equity funds in market is currently at a record high, with 2,348 funds seeking an aggregate $831 billion in commitments, up from 2,248 funds seeking $781 billion at the end of Q2.

Dry powder levels have not continued the rapid increase seen through the first half. At present, the overall figure stands at $1.4 trillion.

— Check out Big Money Managers Fall Short in Disclosing ESG Investment Strategies: Report on ThinkAdvisor.