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Challenging Private Equity Fundraising Environment in 2012 – March 2013

by Kamarl Simpson

  • 25 Mar 2013
  • PE

A significant proportion of private equity fund managers experienced difficult fundraising conditions in 2012, as highlighted by the fact that 43% of the private equity funds that reached a final close last year did so below target. The 2012 percentage is significantly higher than that of 2006, one of the private equity industry’s strongest fundraising years, when only 28% of funds failed to reach their target. The percentage of funds failing to achieve target in 2012 has improved in comparison to 2009 and 2010 when 68% and 50% of funds reached final close below target respectively.

Although fundraising conditions remain challenging, and a significant proportion of funds have failed to meet their capital target over the previous five years, 41% of funds that reached a final close in 2012 exceeded their original fundraising target. This suggests that there is still demand from investors for a compelling fund proposition from fund managers. 2013 may also be an improvement on 2012 in terms of number of funds exceeding their targets with 55% of funds that have held a final close so far this year surpassing their targets.

Global Infrastructure Partners II is one of a number of funds that closed above target in 2012. The infrastructure fund collected $8.25bn in capital commitments closing $3.25bn above target and invests in mature brownfield infrastructure projects in a range of sectors including energy, natural resources, transportation, utilities, waste management and water.

Advent Global Private Equity VII collected €8.5bn in capital commitments in 2012, surpassing its target of €7bn. The buyout vehicle focuses primarily on upper mid-market investments in the developed markets of North America and Western Europe and selectively on other global markets. Another fund to close above target in 2012 is the Intermediate Capital Group raised ICG Europe Fund V focused on mezzanine investments in European mid-market companies across a diversified range of industries. The fund had an initial target of €2bn and achieved a final size of €2.5bn.

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