For all private equity funds which closed within one year in 2012, the average time spent fundraising was 7.9 months. The average time spent on the road has increased by 3.8%, with 133 funds closed in 2011 spending an average 7.8 months on the road compared to 79 funds closed in 2012 spending an average 8.1 months on the road. This illustrates the increasing difficulty for fund managers to attract the required investment from LP’s to meet their targets.
The majority of private equity vehicles which closed within a year are buyout funds, with 27 such fund closes in 2011 and 29 in 2012. Even though the buyout strategy type still remains the most attractive and successful in terms of number of funds closed, the average length of time between first close and final close has increased by 12.5%, from 6.4 months in 2011 to 7.2 months in 2012. The length of time spent on the road from launch date to final close for buyout funds has also experienced an increase of 5.8% since 2011. The buyout fund which spent the least amount of time on the road over the period was the Deerpath Capital II, which took 3.0 months to raise $41mn in capital commitments in 2011. The quickest buyout fund to complete its fundraising in 2012 was the Parthenon Investors IV fund, raising $700mn in capital commitments in 4.4 months.
The growth fund strategy also took longer to raise capital in 2012 compared to 2011, with fundraising between the first close and final close period taking 10.9% longer. This demonstrates that fund managers have taken longer to attract the required LP capital inflow into buyout funds compared to growth funds. The average time spent fundraising between when the fund is launched and when it is closed was 8.0 months in 2011, compared to 9.2 months in 2012, reiterating that there is less investor attraction in growth funds compared to buyout funds. The largest growth fund to close, Baring Asia Private Equity Fund V fund, managed to raise $2,460mn in 4.7 months in 2011. The fund which spent the shortest length of time on the road, THC II managed by Tar Heel Capital, completed its €50mn fundraising efforts within 3.0 months in 2012.
Challenging economic conditions have produced greater distressed private equity opportunities in recent years, and the time spent raising capital for this particular fund type demonstrates the growing demand from LP’s for this type of investment. The average length of time between first close and final close has reduced by 11% from 8 .2 months in 2011 and 7.3 months in 2012. This is supported by the length of time between the launch date and final close date falling by 10% between 2011 and 2012. The fund spending the shortest amount of time on the road was the Nimbus II fund, managed by Nimbus, which took only 6.0 months to raise a total of €65mn in 2012.