The key theme for private capital fundraising in 2018 has been one of slowdown. However, this obscures the fact that the industry is still moving at breakneck speed. The first three quarters of 2018 saw funds raise an average of $192bn each quarter, more than in any previous year except 2017. While 2018 seems unlikely to break last year’s fundraising records, we have still seen 11 of the 100 largest ever private capital funds close – on par with all of 2008 and fewer than only 2016 and 2017 (each with 13).
At the same time, capital concentration is higher than ever before – funds of $1bn or more have secured 63% of capital raised in so far in 2018, up from 59% in the same period last year. The final quarter of the year may see this proportion rise further, as there are a number of unprecedentedly large funds currently seeking capital. These include Softbank Vision Fund which is targeting $100bn, and Global Infrastructure Partners IV, which is seeking $20bn. This is set against a backdrop of uncertainty, with investors and fund managers alike predicting that markets may be headed for a downturn. The consensus seems to be that the long-term investment horizon and strong performance record of private capital is inducing investors to commit more capital to the industry. But at the same time, the impact of this wall of capital, and the upward pressure it puts on deal pricing, are straining the expected performance of many funds in the years to come.
For more Q3 2018 fundraising stats, including breakdowns by asset class, please visit www.preqin.com/research