Private Equity Fundraising in H1 2013 Shows Good Signs of Market Recovery - August 2013

by Luke Goldsmith

  • 21 Aug 2013
  • PE

In the first half of 2013 there were 381 private equity funds to reach final close, garnering an aggregate $218bn. This is the highest amount of capital raised since  $299bn was secured by private equity funds reaching a final close in H2 2008. There were also 282 funds that held at least one interim close in H1 2013, raising $52bn towards their targets.
These 381 private equity funds took an average of 19.1 months to reach a final close. This is a longer time spent on the road in comparison to corresponding vehicles in H2 2012, when funds to reach a final close took an average of 17.7 months. The 10 largest funds to close raised a total of $69bn, accounting for 32% of all the capital raised by funds to close in H1 2013.
The largest fund to reach a final close in the first half of 2013 was Warburg Pincus Private Equity XI, which raised $11.2bn in total capital commitments. The fund makes a variety of venture capital, growth, buyout and special situation investments across a diversified range of sectors and geographies. The second largest fund to close was Silver Lake Partners IV, a buyout fund pursuing large-scale investments within the technology, technology-enabled, and related growth industries in the US, focusing on companies with established business models, and attractive growth prospects.
By geographic focus, North America-focused funds closed in H1 2013 garnered the largest amount of capital, raising an aggregate of $133bn in H1 2013. Europe-focused private equity funds raised $54bn, Asia-focused funds secured $23bn and funds focused on regions outside of North America, Europe and Asia raised a collective $8bn. Both North America and Europe-focused funds raised the largest amount of capital since H2 2008, suggesting that the markets are at the beginning of a road to recovery.

The industry's perceived return to health can further be seen in statistics that look into vehicles that have met, fallen below or surpassed their original target size. A significant 46% of funds to close in H1 2013 exceeded their target size, the most since H1 2011. A further 17% of funds met their target and 37% of funds reached a final close below their target size. The fact that H1 2013 saw the lowest proportion of funds fall below their target for five years is positive news for the private equity industry.

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