In 2007, as the global financial crisis was beginning to take effect, the financial services industry as a whole witnessed a successful year in terms of private equity fundraising. That year saw 22 funds raise $17.8bn in aggregate commitments for the sector, according to Preqin’s Funds in Market database. Despite a subsequent drop, figures for 2008 remained more buoyant than expected in light of the severity of the downturn: slightly more than $12bn in aggregate capital was raised for funds with a primary focus of investing in financial services.
Since 2008, the amount of capital raised for the financial services sector has remained steady; however in 2013 only six funds collected just over $1bn, as shown in the chart above. Last year, 14 vehicles raised $7.1bn, illustrating that 2013 was potentially just a blip, as fundraising recovered to similar levels seen since 2008. So far in 2015, however, only one fund has reached a final close: Dyal Capital Partners II closed earlier this year and seeks to acquire minority ownership stakes in alternative investment management companies. Neuberger Berman is the GP for the fund, and the firm are currently in the process of raising the third vehicle in the series, targeting $2.5bn.
The largest financial services-focused fund to close in 2014 was Trident Fund VI, which completed fundraising on $4.3bn in April of last year, accounting for over half of all primarily financial services-focused capital in 2014. The vehicle follows a similar structure to previous funds raised by Stone Point Capital: making buyout investments in the financial services sectors in North America and Europe. The firm has already made one significant investment in 2015, a $175mn investment in Preston Hollow Capital, a diversified merchant bank formed in January 2014 by the former senior executive management of ORIX USA.
Currently, there are 37 funds in market that will focus primarily on investments in the financial services sector, looking to collect $20bn in aggregate capital commitments. The largest fund currently raising capital is Blackstone Strategic Alliance Fund 3, targeting $3bn to acquire stakes in established hedge fund companies. Of the 37 funds currently in market, 20 have reached an interim close, having collected a total of $5.7bn. If a number of these funds reach a final close before the end of the year, then it is likely that fundraising figures seen in 2014 will be exceeded in spite of a slow start to fundraising for the industry so far this year.