Preqin’s Funds in Market data demonstrates that Q2 2014 private equity fundraising has exceeded the benchmarks set in Q1 2014. 198 funds gathered aggregate capital commitments of $134bn, comparing favourably to the $104bn secured in Q1 2014. Although more capital was raised in the same period last year (Q2 2013), figures from Q2 2014 still indicate the continuance of a flourishing private equity industry, with H1 2014 fundraising having already surpassed the $236bn garnered in H1 2013 (H1 2014 fundraising is likely to increase 10-20% as more information becomes available). Data also suggests that momentum for the private equity fundraising environment is strong, as the average number of months in market of a fund dropped from 16.4 in Q1 to 15.6 in Q2. This is the lowest figure since 2008, when the average private equity vehicle took 14.5 months to reach final close.
Evaluation of the funds that made the most significant contributions to the aggregate capital raised suggests that success in this thriving industry is heavily confined to those well-established managers with a proven track record. These GPs account for an overwhelming 92% majority of the total capital raised in Q2 2014, in contrast to first-time funds securing only 8%. North America-focused funds continue to overshadow European and Asian fundraising, with 114 funds having raised $73bn in contrast to $39bn and $17bn respectively. Funds investing outside of North America, Europe and Asia obtained just under $5bn in commitments.
Analysis of funds by type shows that buyout vehicles collected the most capital in Q2 2014, with 41 funds securing an aggregate $60bn. North America-focused funds gathered more than half of the aggregate for investments of a buyout nature. These buyout statistics surpass those recorded in Q1 2014, when 37 buyout funds garnered $29bn. However, the largest private equity vehicle to reach final close in Q2 2014 was a secondaries fund: Ardian Secondary Fund VI raised $9bn to invest in global opportunities, $2bn above target. This will have impacted the average size of private equity funds closed in Q2 2014, which in fact now ranks as the highest quarterly figure to date at $712mn. It is also interesting to note that over half (53%) of all private equity funds closed in this quarter exceeded the amount of capital initially targeted.
These metrics all serve as testament to the success of Q2 2014 fundraising, which comfortably eclipsed the Q1 2014 touchstone. Combined fundraising for H1 2014 totals $238bn; if the current impetus continues into H2, there is the possibility that 2014 may match or outstrip the $511bn garnered via 1,096 private equity fund closures in 2013.