In the first half of 2013, a total of 30 private equity fund of funds vehicles held a final close raising an aggregate $6.9bn. In comparison, 44 fund of funds vehicles held a final close in the first half of 2012 raising a total of $8.7bn. Of the funds of funds to attain a final close in H1 2013, 18 have a primary focus on the US, six on Europe, five focus primarily on Asia and one on the Americas. Sixteen of the closes were attained in the first quarter of the year, with $5.4bn raised, and 14 closes were held in quarter Q2, with $1.5bn raised. Just three vehicles secured $500m or higher, while almost half (43%) closed on $100mn or less.
The largest fund of funds vehicle to attain a final close in H1 2013 was China Development Bank Capital’s Guochuang Kaiyuan Fund of Funds, which raised a total of $2.4bn, representing just over a third (35%) of all capital raised by funds of funds that closed in H1 2013. The main objective of the fund is to provide capital for domestic (Chinese) private equity and venture capital firms that have difficulty in raising funds, and it is expected to be a significant limited partner for each fund in which it participates.
The next largest fund of funds to close was Portfolio Advisors Private Equity Fund VII which raised $1.1 billion. The vehicle provides investors with access to seven strategies: diversified buyout, venture, diversified special situations, Rest of World mid-market buyout, US mid-market buyout, distressed and co-investments.