Large Buyouts at Fundraising High – September 2014

by Kamarl Simpson

  • 26 Sep 2014
  • PE

Buyout fundraising has experienced a resurgence over the last two years, spurred on by increasing confidence in the economies of the traditional buyout markets of North America and Europe, in conjunction with the availability of cheaper debt.  This is particularly evident in 2013’s fundraising statistics which came close to breaking the $200bn mark – a level that has only been surpassed in the boom years of 2006, 2007 and 2008. So far this year, $126bn has been raised by buyout vehicles that have completed fundraising. It is encouraging to see that this figure is $10bn more than fundraising levels at the same point in 2013.  

Examining the breakdown of buyout fundraising by size, as shown in the chart above, reveals that so far in 2014, large buyouts are proving the most attractive to investors, having secured an aggregate $67bn. With just over three months still remaining in 2014, this figure already stands at the largest amount ever raised in a year by buyout funds of this size. At present this is a 37% increase on the previous high of $49bn raised in both 2007 and 2013.  

The chart above also shows that in comparison to 2013, there has been a significant decline in total capital raised by mega buyout funds in 2014. Only four such funds have held a final close to date, the largest of which is the $7.3bn raised by Bain Capital Fund XI. Using Preqin’s Funds in Market data to examine the state of mega buyout funds in market reveals there are currently seven such funds seeking a combined $56bn. Hellman & Friedman VIII is an example of one of these vehicles likely to reach a final close before the year end, on its hard cap of $10.25bn. 

As it stands, 88 of the 247 buyout vehicles currently on the road seeking an aggregate $190bn have held at least one interim close, having collected an aggregate $30bn towards their targets. Combined, large and mega buyouts are seeking 61% of total targeted capital. Funds of this size play a vital role in the investment portfolios of larger LPs such as pension and sovereign wealth funds, as an efficient way to put large amounts of capital to work. 

*Buyout Fund Size Ranges: Small Buyout ≤$500mn, Mid-Market Buyout $500mn-$1,500mn, Large Buyout $1,501mn-$4.5bn, Mega Buyout > $4.5bn 

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