The private equity industry continues to grow as new fund managers emerge and market their funds. The $26bn raised by first-time fund managers in 2016 represents the second consecutive rise in capital raised and the largest amount secured since 2012 ($26bn). Despite this, 2016 saw the lowest number of first-time funds close since 2010 (209), resulting in the average first-time fund size increasing by $22mn from 2015 to $146mn in 2016.
As shown in the chart above, the increase in capital raised over 2016 can primarily be attributed to the $13.5bn raised by North America-focused funds, up 66% from the previous year. Two notable first-time North America-focused funds closed on $1bn, Gamut Investment Fund I and Altas Partners Holdings. Partners of both firms had prior experience in the industry before raising their debut funds: Gamut Capital Management’s founders were Senior Partners at Apollo Global Management and the Managing Partner at Altas Partners previously worked at Onex Corporation as a Managing Director.
Other Key Findings:
- Thirty-seven first-time Europe-focused funds raised $8bn, nearly double the amount raised in 2015.
- Asia-focused first-time funds fared less well in 2016, raising a combined $3.2bn, less than half of 2015’s total ($6.9bn).
While first-time funds captured a smaller share (7%) of total capital in 2016 than in 2012 (12%), it was not far off the average. First-time fund managers have accounted for, on average, 8% of all private equity capital raised each year since 2012.
- In the more developed regions of North America and Europe, first-time funds closed between 2012 and 2016 accounted for 5% and 6% of total capital raised respectively.
- Over the same timeframe, first-time funds focused on the less traditional markets accounted for larger proportions of the regional total: first-time funds represented 20% of Africa-focused private equity capital raised, while the corresponding proportions for Latin America, Asia, Australasia and the Middle East & Israel were 12%, 14%, 11% and 16% respectively.
2017 has so far seen 29 first-time funds reach a final close, raising a total of $4.1bn, 9% of the total capital raised this year. There are currently 642 first-time funds in market targeting a total of $210bn, 34% of all targeted capital; however, much of this is due to Softbank Vision Fund targeting $100bn. Excluding this fund, the proportion of total capital targeted by first-time funds falls to 18%. Over half (330) of funds in market are focused primarily on North America and aim to raise an aggregate $135bn. Europe-focused funds account for 93 of the first-time funds in market, targeting a total of $21bn (€18bn).