PE Fundraising, for the first quarter of 2016 has shown early signs of a strong fundraising year for the private equity industry. At $100.91 billion collected from the close of 150 vehicles, total capital gathered in Q1 2016 is $680 million more than in the first quarter of the previous year, and a further $38.19 billion more than capital gathered at the same point in 2010.
PE Fundraising in the first quarter of the year so far indicates that investor appetite for the private equity industry continues to grow, as fund managers bring larger vehicles to the market to meet demand. In 2015, $399.73 billion was raised for closed-ended private equity funds by year end. Although below 2013’s bumper fundraising figure, this was $4.59 billion higher than the amount gathered in 2014.
The next 12 months could see lower returns and fewer distributions than those experienced over the last 12 months, and over the last several years for that matter. Private equity investors have achieved a strong run of exits and distributions, with increasing Net Asset Values on the back of both strong company-level operating performance and public market comparables. However, with the dip in public markets over the last few months, both distributions and valuation increases are likely to be slow; transactions will still occur, so distributions are not anticipated to dry up completely, but the rate may trail off. Not all strategies or managers are seeing declines, although certain areas have clearly been impacted. The underlying companies appear to
be doing well, but the comparables are lower and that is impacting the valuations. It is worth noting, however, that with the rebound in March, US stock markets are in roughly the same place as they were at the beginning of the year. This should add support to more recent valuations and allow private equity managers to avoid some of the intra-quarter volatility seen in the public markets.
Finally, we hope this data is helpful and informative to everyone!
John F. Denes